Third quarter security listed companies are mixed

As of October 31, the third-quarter financial reports of listed companies in Shanghai and Shenzhen had been published one after another. Among them, several publicly traded firms whose core business revolves around security solutions also released their Q3 2012 earnings reports. So, how did the security industry perform during this period? The figures provided in these listed company reports offer some of the most compelling insights. Below are some key takeaways from the latest quarterly reports of several prominent security-focused listed companies: The third-quarter performance of security stocks has been a mixed bag. Hikvision released its Q3 report on October 27, reporting revenues of nearly 4.8 billion yuan from January to September, marking a year-over-year increase of almost 39%. Net profit attributable to the parent company reached 1.24 billion yuan, up nearly 43% year-over-year. In the third quarter alone, revenue was close to 2 billion yuan, representing a 44% year-over-year rise, while net profit amounted to 510 million yuan, a nearly 49% increase from the same period last year—higher than the 38.5% growth recorded in the first half of the year. This suggests that the company's performance is gaining momentum, indicating that the security industry remains robust. Front-end equipment continues to drive much of the company's growth in Q3. Hikvision also predicts that its annual net profit will increase by 30% to 50%. Dahua Technology unveiled its Q3 report on October 25. For the first nine months, the company achieved operating revenue of 2.193 billion yuan, a 50.13% year-over-year increase. Net profit attributable to listed shareholders stood at 378 million yuan, up 85.08% year-over-year. In the third quarter alone, Dahua generated operating income of 896 million yuan, a year-over-year increase of 58.18%, and reported net profit of 152 million yuan, a staggering 102.03% year-over-year jump. These figures indicate that the company's revenue and profits have continued to soar at impressive rates, with the single-quarter growth reaching its highest point since early 2011. Dahua expects its annual net profit to range between 6.05 and 7.56 billion yuan, representing a year-over-year increase of 60% to 100%. Meanwhile, Hanwang Technology, which released its Q3 report on October 25, saw total revenue for the first nine months reach 300 million yuan, a 23.64% decline from the previous year. Despite a year-over-year increase of 86.25% in net profit, the company still incurred a loss of 38.18 million yuan. In the third quarter alone, the company posted a net loss of 19.62 million yuan, an 81.13% year-over-year increase. From January to September 2012, the loss per share was 0.18 yuan, and the company anticipates an annual net loss. To reverse its fortunes, Hanwang Technology’s management plans to divest non-core businesses and assets in Q4, invest further in new product development, optimize staffing, and tighten cost controls. Other companies such as Infinera, Dinghan Technology, and Diwei Video have also seen less-than-stellar performances. On October 25, Infinova reported a net loss of 9.14 million yuan for the first three quarters, a 119.98% drop from the previous year. Dinghan’s net profit stood at 2.55 million yuan but was down 95.99% year-over-year. Diwei Video Network recorded a net profit of 8.67 million yuan, a 26.69% decline compared to the same period last year. The security industry, often hailed as a sunrise sector within China's national economy, represents a convergence of multiple industries. Its development trajectory aligns closely with China's economic growth patterns. However, the security industry has its unique challenges, particularly when it comes to policy shifts. As China transitions from a growth model driven by factor inputs to one focused on efficiency improvements, the security industry will face greater competition. Building strong brands will thus become a crucial pathway for companies looking to enhance their performance and thrive in this evolving landscape.