Market Analysis: Focus on Security Surveillance Equipment Sub-Industry

(I) Security monitoring equipment sub-industry 1. It is expected that the growth rate of back-end DVR will slow down, and the front-end camera market will maintain high growth. It is expected that the focus of next year will remain high-definition.

The Ambulance Group clearly felt that the DVRs and NVRs of the monitor equipment manufacturers' product exhibition areas have significantly decreased compared to last year, and each manufacturer is mainly focusing on the front-end camera market. The main reason is that, on the one hand, Huawei Hass ASIC chips lead to a reduction in the DVR product differentiation, and ASIC chips lower the secondary R & D threshold after a large number of small manufacturers enter the DVR field => Dahua Haikang price war in April-April => The overall price and profitability of DVR products (especially CIF and 4CIF series) is declining (Haikang and Dahua maintained comprehensive profit margins through the launch of new Netra and H6 platform products respectively); on the other hand, the IP HD camcorder market broke out. Diversified back-end storage solutions. We expect the overall growth rate of the DVR industry will slow down next year and is expected to be around 18%-20%.

The front-end camera market has shown explosive growth. The current focus is still on “high-definition”-based, and there are no major manufacturers launching new concept products. We believe that HD cameras (mainstream solutions including IP HD and HD-SDI HD) will continue to show high growth next year. Among them, HD-SDI will be due to clarity, real-time/security of transmission, and the power of contractors/integrators in the short term. High-end projects are hot, but we expect IP high-definition will become the future trend.

2. Single-product manufacturers will be marginalized risks; equipment vendors are transforming into system solution manufacturers; the trend is that we have always paid attention to such companies as Hikvision, Dahua, Infinera, Wave Grain, Zhongxing Liwei, Hanbang Gaoke and others. Security monitoring equipment manufacturers have launched a full range of front-middle-back-end product lines for security monitoring equipment. We believe that in the security industry, which focuses on industry/government requirements, there will be risks of marginalization for only single-product manufacturers.

This time, AMB will see more about the contents of the solutions. We believe that the transition of equipment vendors to system solution vendors is a general trend. The main reasons are: (1) There are many types of security products, and the industry needs are different. "ServiceSolution" has become the mainstream business model; (2) In order to avoid pure product price competition, shorten the industrial chain and ensure the maximization of profits; (3) Solution Due to the accumulation of more successful cases, with high barriers and hard copy attributes, large vendors can maintain their competitiveness through solutions. The speed of transition will determine future share and competitiveness.

3. The general view that the overseas market growth rate is expected to be better than that of the domestic market next year is that (1) Although the declining growth rate of government investment next year may cause certain negative impact on the industry, the stability of the government during the transition period is expected to increase. The domestic market is still relatively good next year. (2) The probability of a rebound in the overseas market is high. On the one hand, traditional markets such as Europe and the United States have been stabilizing with economic stabilization/public safety incidents, and demand has stabilized; on the other hand, the booming market conditions of India and Brazil’s two emerging economies have risen to Indian banks. For example, 70% of bank counters are not equipped with cameras, so there is a large market potential.

(II) The promotion of the access control system/smart home sub-industry manufacturers has increased. Anti-theft alarms still require time-limited access control systems and smart homes as the narrower sub-sectors in the industry. In previous years, the propaganda of the Anbo Fair was small, but this year it is obvious The companies in these two businesses are highly motivated. We will continue to keep track of the two listed companies, Jieshun Technology and Anjubao.

(III) The situation of listed companies in the industry In addition, we conducted full communication with senior executives of Hikvision, Dahua, and Infino.

Hikvision, at present until 2012, our main push in the security industry is still Hikvision. The company’s strategy to expand its solution to overseas expansion in the multi-business area has been clearly defined, and this year's next year, the EPS is well-determined, and we are still positive.

Infinera, due to the postponement of the security project in Shanghai caused the low of this year's performance, is expected to have greater upward flexibility next year; In addition, the company's extension of expansion / multi-brand operation has been determined, significant significance to cut into the overseas market.