No Fear Of "List Of Entities" Hai Kang And Dahua Said There Are Alternatives.

China's high-tech enterprises, which are listed in the "entity list" of us export control, are actively responding.

On the evening of October 9th, Dahua shares of Hikvision and Dahua Technology parent company announced in succession that the entity list by the US Department of Commerce was controlled by the company's normal production and business operation (not having an important impact) and applied for resumption in October 10th.

At present, the vast majority of us components can be directly replaced or replaced by new design alternatives, which will not affect the performance of products or the impact is relatively slight. A small amount of materials that are temporarily too late to replace can be exchanged for longer replacement time. A small number of materials can be purchased and combined by customers by adjusting their business strategy. " Huang Fang Hong, Hikvision's deputy director, pointed out at the investor exchange meeting held in October 9th.

On the same day, Li Ke, President of Dahua shares, said that in terms of business, Dahua has basically established a safe and reliable compliance system. In the aspect of business continuity, some alternative work has also been done, and an alternative has been made for components that may be added to the entity list. A few of them have no alternatives, and they can satisfy customers' needs through other schemes, which basically can satisfy the continuity of supply.

Most of the alternatives can be realized.

Beijing time on October 8th, the US Department of Commerce announced that 8 Chinese high-tech companies were included in the export control entity list. Hikvision and Dahua shares announced a temporary suspension before October 8th. Another company, the company, fell 2.67% on the same day, and rebounded 1.73% next day.

As a matter of fact, domestic enterprises and investors have long expected to be included in the entity list.

"Hikvision and Dahua shares have prepared plans for these leading enterprises. For example, the domestic substitution of core chips has been accelerating. Dahua shares launched the self developed AI chip last year. HUAWEI Hass, national Ke Wei, Fu Han micro and so on are also rising rapidly. An electronic industry analyst from a medium-sized brokerage in Shanghai said.

It further added that "Hikvision and Dahua shares are also stocktaking some stocks ahead of time. Like Hikvision, the stock of raw materials has increased by 90% this year, and the stock of goods has increased by 30%. The company has a certain buffer period.

Earnings data showed that Hikvision increased its inventory by 50.41% in the first half of 2019, increased 93.84% of raw materials, and the raw material of Dahua shares increased by 90.80% compared with the beginning of the year.

The abundant reserves provide more preparation time for Hikvision to realize the replacement of components. According to the introduction, without affecting the product performance or slight influence, the vast majority of American components in Hikvision can be directly replaced or replaced by new design alternatives.

"On special devices, our dependence on the United States is very low, for example, the lens has Shun Yu optics, CMOS sensors have great power, and other companies are also growing, and more overseas depends on SONY, that is, the high-end part." Hikvision President Hu Yangzhong pointed out.

However, he also pointed out that there are still some dependence on the general device (for the US), such as flash, CPU of the server, GPU for AI at the early stage, DSP for some specific fields. But with the development of related products, the material dependence of the company on the US is actually decreasing.

According to Hikvision executives, the company will further increase R & D investment if there is a need to design its own program.

In 2018, Hikvision's R & D investment reached 4 billion 483 million yuan, an increase of 40.35% over the previous year. In the first half of this year, Hikvision increased its R & D expenditure again, with R & D expenditure of 2 billion 505 million yuan, an increase of 30.95% over the same period last year.

Does not affect exports

For investors, the most obvious concern is the impact on company performance.

"The short-term impact of the market may not respond very much. The key is to look at the performance this year." Beijing, a private equity fund research director pointed out.

For this doubt, Hikvision executives said they were optimistic in the long run.

"In regard to performance expectations for 2019, a short list of entities will cause a wave of impact, which may cause some fluctuations in the company's performance, and the impact will be reduced in the medium to long term. The company will continue to maintain a sound business strategy. We have strong faith in the medium and long-term development of the company." Huang Fanghong pointed out.

According to Huang Fanghong, the restrictions included in the entity list include imports from the United States or other countries, restricted imports of technology or software from the United States, and will not affect the export of the company to the United States, and the company will not abandon the US market.

Huang Fanghong said: "Hikvision has not abandoned the US market plan. We will continue to open up the US market and continue to serve the customers in the US market. There will be no restrictions on the products and services provided by Chinese domestic customers and other countries' customers. The company has the ability to guarantee a stable and stable supply of products. Besides the restricted procurement content, Hikvision's other business activities are not subject to any restrictions."

According to the 2019 China daily data, during the reporting period, Hikvision's overseas business revenue totaled 6 billion 943 million yuan, accounting for 29.02% of the total revenue of the company.

According to Hu Yangzhong, President of Hikvision, many of the clients had anticipated the early Sino US relations.

"Because there are some stocks, the short-term impact of the company is not great, but how much the customer has changed, there is indeed uncertainty, but from what we feel now, the impact may be smaller than expected, because there is already a psychological expectation. Yesterday, I stayed in a client for a few hours. He knew that we were listed on the list, but we didn't talk about it at all. We have been talking about future cooperation. He thinks Chinese companies have continued competitiveness. Hu Yangzhong said. (Editor: Wu Yan Ling)