Hangzhou Hikvision emerges as foreign investor favourite after mainlanders dump the stock
Surveillance equipment market leader is among the most-favoured stocks by foreign investors trading via Hong Kong-Shenzhen connect
What is considered poison for mainland Chinese stock investors is seen as a delicacy by their foreign peers when it comes to shares of the country’s largest maker of surveillance equipment.
New regulatory filings by Hangzhou Hikvision Digital Technology show that it currently has no mainland-based money managers among its 10 biggest shareholders. However, the Shenzhen-listed maker of video surveillance equipment has emerged as a favourite for foreign investors trading through the Shenzhen-Hong Kong exchange link. Overseas investors had acquired a combined 4 per cent of the company through the link as of April 3, the second highest for any Shenzhen-Hong Kong connect stock, according to data from Hong Kong Exchanges and Clearing.
The Hangzhou-based company supplies surveillance equipment used in public places such as airports and schools, with sales almost three times more than those of its next biggest domestic rival. Though earnings growth almost halved over the past two years, Hikvision has posted profit increases every year since it listed on Shenzhen’s board for small and medium-size enterprises in 2010. The stock has advanced 34 per cent this year, compared with a 5.4 per cent gain for the benchmark Shanghai Composite Index.
Overseas investors will pay a premium for leading companies in their industries ... Domestic investors like growth stories better
“Overseas investors will pay a premium for leading companies in their industries. They want a secure outlook, stable profit margins and good liquidity for easier buying and selling,” said Dai Ming, a fund manager at Hengsheng Asset Management. “Domestic investors like growth stories better and Hikvision is already past its high-growth period, so they see the company as more of a blue chip and don’t give high valuations to such a big-cap stock.”
Dai does not own any Hikvision shares but holds the stock of its main rival, Zhejiang Dahua Technology.
Hikvision’s latest quarterly report showed UBS Group and Morgan Stanley were its sixth and ninth largest shareholders respectively at the end of September.
Both investors declined to comment when contacted by the South China Morning Post.
Hikvision’s 2016 results are due out next week.