EVETAR Gross Margin Disregards Its Competitors

EVETAR, which has more than 60% of its overseas business, uses flexible strategies to avoid the impact of the trade war. In the future, EVETAR will continue to expand the influence of Chinese optical lenses in the world by virtue of its high-quality products and flexibility in sales and services.

 

Video surveillance and mobile phone cameras make life full of cameras.

 

These ubiquitous cameras are probably produced by Chinese manufacturers, because in 2018, Chinese manufacturers accounted for at least 79% of the global mobile phone camera market, global security surveillance cameras accounted for at least 93.7%.

 

These manufacturers include Forecam shares (688010) with a market value of 6.2 billion, Union Optech  (300691) with a market value of 3.3 billion, and Sunny (HK2382) with a market value of 100 billion.

 

However, the gross profit margin of these well-known listed companies is not as good as EVETAR Optics, which has a revenue of only 590 million and is not listed: EVETAR has maintained a gross profit margin of more than 52% in recent years, while the average gross profit margin of other domestic comparable listed companies Roughly around 35%. Among them, Sunny (HK2382) has the highest gross profit margin, but it does not exceed 45%.

 

The gross profit margin of EVETAR products is higher than other comparable listed companies. Why? Is it export-oriented, will it be affected by the trade war?

 

The highest gross profit of optical lens in China

 

The modern optical lens industry started in Germany in the 1860s. Representative companies include Carl Zeiss and Leica. Today, Zeiss lenses are still the typical representatives of the world’s lenses.

 

With the rapid development of modern science and technology, as well as international industrial transfer and division of labor, the optical lens market has developed into a globalized and multi-polarized market with fierce competition.

 

In the process of international industrial transfer, important players in the high-end market such as Japan’s Canon (CANON), Nikon (NIKON), Tamron (TARMON), and FUJINON (FUJINON) have been left behind, and Taiwan, China has developed with the popularization of consumer electronics LARGAN, GENIUS and other enterprises.

 

According to TSR statistics, in 2018, the top seven manufacturers in global shipments were all Chinese companies, and these seven manufacturers together accounted for 93.7% of the global market share, which also marked the shift of optical lens manufacturing to mainland China.

 

Although Leading Optoelectronics has a small market share, its gross profit margin of more than 52% is among the best in the industry, far exceeding the average level of 30% to 35% of comparable domestic companies, and also significantly higher than Sunny Optical, which has the second gross profit margin.

 

The reason why EVETAR’s gross profit margin is higher than that of domestic comparable companies is that it mainly exports mid-to-high-end products. The products have higher added value and naturally have higher gross profit margins.

 

Most of EVETAR’s comparable companies are mainly in the domestic market. The downstream customers are mainly Hikvision (002415) and Dahua (002236), which have very strong bargaining power. These two companies have firmly occupied the domestic market through low price strategies. market. Therefore, Hikvision and Dahua have very strict controls on supplier prices, at the same time,  the prices of optical lens suppliers. For example, Dahua clearly stipulates that if the price of the product supplied by the supplier in the same period is higher than the market price of the product or the price supplied to a third party, Dahua has the right to change the price of the executed order, and the supplier must agree to The difference is directly deducted from the payment payable.

 

Compared with companies that rely on Hikvision and Dahua shares, EVETAR downstream terminal manufacturers are almost all from overseas, such as Panasonic, Axis, Bosch, Arlo ), Ring and other world-renowned electronic product manufacturers or brands, the overseas revenues accounted for 65.80%, 70.85%, and 78.24% respectively in the past three years.

 

In addition, Leading Optoelectronics’ positioning in the mid-to-high-end market is also an important reason for its high gross profit margin.

 

This is because international high-end lenses compete for technology, quality and brand, and price is a secondary factor; while domestically, price has become the core factor of competition.

To become a high-end optical lens supplier to overseas high-quality manufacturers, the quality of EVETAR’s products is crucial:

At present, EVETAR 255°field angle horizontal fisheye lens, fixed focus lens with up to 16 million pixels, starlight zoom lens with 0.95 light transmission, long-focus short-wave infrared lens and other optical lens products belong to their respective subdivisions. It is a product with high technical difficulty and leading industry level.

Leading Optoelectronics is able to manufacture so many high-quality optical lenses, mainly because of its high level of technology. It has formed “optical system temperature drift control technology”, “optical lens ghost image, stray light analysis and control technology”, etc. Six core technologies.

 

Skillfully avoid trade wars
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smart home

Smart home track, can there be new winners?

Speaking of the smart home ecology, the first reaction of most consumers is hardware manufacturers such as Xiaomi MiJia, Haier Smart Home, and MSmartLife. The giants either control the traffic entrance or the hardware barriers. In the fierce ecological competition, other manufacturers are becoming the objects of ecological integration. Can rely on single-category products have a firm foothold on the smart home track? The sudden emergence of security vendors provides an excellent example. HIKVISION’s ” CZVIZ ” and Dahua’s ” LMOU” have gained popularity on the smart camera track with their accumulation in the surveillance and security field, and are already in the first echelon with players with Internet backgrounds such as Xiaomi and 360. Fluorite has revenue of more than 2.5 billion RMB in 2019 and has plans to go public independently.  After completing the breakthrough in the smart camera single category market, CZVIZ and LMOU continue to expand their categories on the smart home track, and adapt to more and more scenarios.

 

Internet companies focus on home security Although there were mature security surveillance products 20 years ago, the invention of smart cameras does not belong to veteran surveillance veterans such as Panasonic and Sony, nor does it belong to upstarts such as Haikang and Dahua. Instead, it is a thorough Internet product. At first, American software engineer Greg Duffy just wanted to help his father build a camera monitoring system at home, but there were many obstacles. So Grey and Aamir Virani disassembled and modified the camera together to make it have the function of remote real-time viewing.

Starting from the transformation of the camera, the two founded Dropcam in 2009, which has become popular in the United States in just a few years. In 2014, Dropcam was acquired by Google’s smart home brand Nest for $550 million. Remote monitoring, cloud storage services, two-way communication, voice and motion capture…Dropcam has actually figured out the main “play” of smart cameras. China’s security giants also responded quickly. As early as 2013, Hikvision launched the ” CZVIZ” brand. In 2014, Dahua also launched the “LMOU” brand, targeting the civilian smart Internet.

evetar lens

Where is the high definition of the 4K camera in security industry?

4K Ultra HD is extending to the security field. For security companies, although they face challenges, they must not give up great opportunities.

 

On March 2, the Ministry of Industry and Information Technology released the “Ultra HD Video Industry Development Action Plan (2019-2022)” (hereinafter referred to as the “Action Plan”), pointing out that the domestic 4K industry ecosystem will be basically complete in 2020, and the R&D and industrialization of 8K key technology products A breakthrough has been made, and 4K TV terminals will be fully popularized in 2022, and 8K TV will account for 5%. 4K Ultra HD is extending to the security field. For security companies, although they face challenges, they must not give up great opportunities. Three-year plan for the ultra-high-definition video industry: 4K first and 8K The action plan refers to planning the direction and requirements for the domestic ultra-high-definition video industry, and vigorously promote the development of the ultra-high-definition video industry and applications in related fields in accordance with the overall technical route of “4K first and 8K”. The action plan also pointed out that by 2020, 4K cameras, monitors, switchers and other special equipment for acquisition, editing and broadcasting will form industrialization capabilities; in the fields of culture, education and entertainment, security monitoring, medical health, intelligent transportation, and industrial manufacturing, ultra-high-definition video-based Application demonstration.  The security field is gradually extending to 4K Ultra HD 4K Ultra HD, the technology originally used in TV products, is gradually expanding into the security field. The Action Plan proposes that in the future, it is necessary to accelerate the development and mass production of ultra-high-definition surveillance cameras, promote the upgrading and transformation of security monitoring systems, and support the development of AI algorithms based on ultra-high-definition video for face recognition, behavior recognition, and target classification to increase the scope of surveillance , Recognition efficiency and accuracy rate, to create a batch of intelligent ultra-high-definition security monitoring application pilots. In addition, the Action Plan will promote the application of ultra-high-definition video technology in intelligent connected vehicles, strengthen the R&D and mass production of ultra-high-definition vehicle image sensors and vehicle screen products, and enhance vehicle perception and human-computer interaction experience.  It is foreseeable that the next five years will be a period of strategic opportunities for the development of my country’s ultra-high-definition video industry. We must accurately grasp the major opportunities brought by the development of the ultra-high-definition video industry, strengthen top-level design, and accelerate industrial development and application popularization.

 

Toward 4k Ultra HD faces challenges The development of the ultra-high-definition video industry will drive the intelligent transformation of the industry with video as the core, promote the core links of the industry chain to move towards mid-to-high end, and accelerate the construction of ultra-high-definition video industry clusters. . In theory, the UHD industry has a bright future, and the security industry as an UHD application industry will also face another upgrade in industrial development. However, the reality is often cruel. The security industry is still facing many difficulties in moving towards 4k UHD. The most important one is the high cost of UHD applications. In addition to cost, in terms of standards and specifications, various companies in the industry chain have their own interpretation, definition, and development of technical standards and experience levels, resulting in inconsistent steps in the industry chain. The realization of the system’s 4K UHD also requires a unified standard and pace.  4K video conferencing is at the time Recently, with the listing of ZOOM cloud video conferencing company in the United States, the upsurge of the video conferencing market has further heated up.

 

Microsoft is developing a 4K webcam with Windows Hellow function, especially for Windows 10 PC and Xbox One devices. This will be their first standalone Windows Hellow camera. Microsoft is likely to extend these cameras from the entertainment field to applications for corporate meetings and events. In China, the government, courts, medical care, education and other industries are all major customers of cloud video conferencing. Their requirements for video conferencing systems will gradually shift from high-definition to ultra-high-definition. For our security companies, seizing this opportunity to develop ultra-high-definition video for cloud conferences and using technology upgrades to expand their business is one of the ways to enhance their competitiveness.