Hikvision: Growth Stagnation, When Will the Breakthrough Come?

Hikvision released its Q3 2025 financial report (as of September 2025) after the A-share market closed on the evening of October 17, 2025, Beijing time. Key points are as follows:

1. Revenue: Hikvision achieved revenue of 23.9 billion yuan in Q3 2025, a slight year-on-year increase of 0.7%. The company's current operating conditions remain relatively sluggish, with revenue showing no significant growth for five consecutive quarters.

Considering the business situation in the first half of the year, $HIKVISION(002415.SZ) the current growth mainly comes from innovative businesses, while domestic main businesses are still affected by tightened government payments and macroeconomic factors, with related demand remaining relatively weak.

2. Gross Profit and Expenses: Hikvision's gross profit margin in Q3 2025 was 45.7%, an increase of 1.5 percentage points year-on-year, mainly driven by the improvement in hardware gross profit margin and the increased proportion of innovative business.

The company's operating expenses for this quarter were 7.05 billion yuan, a year-on-year increase of 1.3%, remaining relatively stable. Sales expenses and R&D expenses are the largest parts of operating expenses, and both expenses showed no significant changes this quarter, suggesting that the company's personnel and investment expenditures are stable;

3. Profit: Hikvision achieved a profit of 3.66 billion yuan in Q3 2025, a year-on-year increase of 20.3%, with a net profit margin of 16.6%, an increase of 2.9 percentage points year-on-year. The year-on-year growth in the profit side is mainly due to the improvement in gross profit margin, currently returning above 45%. While the revenue side remains flat, the expense side remains relatively stable, and the demand in the company's domestic traditional fields and related markets is still sluggish.

Dolphin Research's overall view: Revenue continues to "lie flat," growth dilemma is hard to break

Hikvision's revenue for this quarter increased slightly by 0.7% year-on-year, with no significant growth for five consecutive quarters, reflecting the sluggish state of downstream demand for the company.

Considering the business situation in the first half of the year, the company's sluggish performance is mainly dragged down by the domestic traditional market, where tightened spending by government procurement, enterprises, and small and micro enterprises directly affects the demand for domestic security products. Although innovative business and overseas markets still have growth, their proportion is small, having a weak impact on the overall revenue side.

In the case of weak revenue growth, the company also controlled the increase in expenses, with sales expenses and R&D expenses remaining stable. With the improvement in gross profit margin, the company was able to deliver quarterly profits as expected.

As for Hikvision, the market mainly focuses on the following aspects:

a) The company's two current growth points: overseas market & innovative business

① Overseas market: The company's main incremental demand comes from emerging markets. However, it should not be overlooked that the current growth rate of the company's overseas business revenue has significantly fallen to single-digit growth;

② Innovative business: It is a hopeful area for the company, including smart home, robotics business, etc., with a current growth rate of only about 15%. Although innovative business still has double-digit growth, the 30% revenue proportion does not significantly drive the company's overall revenue.

b) The company's largest fundamental base: domestic business is still under pressure.

In the case of growth in the above two businesses, the company's total revenue has not seen growth, suggesting that the company's three major domestic business units are still declining.

Among them, the PBG department (Domestic Public Service Business Group) has continued to decline after the pandemic, affected by the government's relatively cautious spending in areas such as public safety and smart cities; EBG (Domestic Enterprise Business Group) and SMBG (Domestic Small and Medium Business Group), affected by macroeconomic factors, have reduced corresponding investments and expenditures.

Overall (a+b), overseas & innovative business are growth drivers, but performance recovery still depends on domestic market performance. Currently, Hikvision's domestic revenue accounts for over 60%, and if domestic market demand remains sluggish, the company's overall performance will be difficult to improve significantly.

Considering Hikvision's current market value (303 billion yuan), it roughly corresponds to an estimated 2026 net profit valuation of about 20 times PE (assuming revenue growth of +11% year-on-year, gross profit margin of 44%, tax rate of 10%). Referring to the company's historical valuation range (16-27 times PE), the current valuation is in the lower-middle position, reflecting the current market's lack of confidence in the company's accelerated growth.

Overall, Hikvision's current operating performance remains stable, but the biggest shortcoming is the lack of growth. With the company's stable performance and nearly 15 billion yuan in annual profits, the company's valuation/stock price is unlikely to experience a significant "collapse."

On the other hand, the current situation of non-growth in the revenue side also makes it difficult to bring further development confidence to the market. If the company experiences a recovery in domestic business, and significant growth in innovative business/overseas business, there will be an opportunity to reopen the company's growth space.

The following are Hikvision's financial report and related data charts: