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Gross Output of Security Industry Will Reach RMB 500 Billion Print E-mail
Saturday, 23 July 2016 13:59

One large blast took place shortly after 7 pm Apr. 30 local time at the exit of the Urumqi South Railway Station, which caused many casualties. The injured were taken to hospital immediately for treatment and everything on spot returned to normal again. At present, the reason why the bomb attack has occurred is still under investigation. 

It is judged initially by local police that the explosion at Urumqi South Railway Station was a serious and violent terrorist attack. The attackers used knives to stab people at the station exit and detonated the explosives at the same time. At least three died and 79 others were injured, 4 seriously (no life danger) in the blast, knife attack. 

Since the attack in late June, 2013, stock market has begun to cook up hype for concept stock of security companies. As safety vulnerability was exposed to the public after the disappearance of a Malaysia Airlines plane, security products investment was paid higher attention in the aspect of social public safety, especially to the integration with networking and informationization. Under this kind of condition, concept stock of security companies will be the focus in long term.

Executive meeting of State Council has recently made clear three measures to boost economy, including shanty areas rebuilding supported by development finance, policies and measurements to deepen railway investment and finance system reform to speed up its construction and income tax preferential expandable scope for small and micro business. 

A large demand of cameras and safety inspection devices should be used in shanty areas rebuilding, railway and subway construction. Under the state support of strengthening infrastructure construction, there is a huge need for security products related in the market.

It was reported that security situation inland is not optimistic so that it should be invested increasingly. Protective alarm is the main measure to fight terrorist attacks. The investment of networking intelligent platform and application for safety products need increasing nationwide.

According to 12th five-year plan of China Security& Protection Industry, its output value is estimated to reach RMB 500 billion in 2015, up to 20% CAGR. With the development of economy, it, as one part of public safety, is inevitable in rigid demand. 2012 State Council Budget Report shows it is estimated to be RMB 701.763 billion in the public safety, increased by 11.5% compared to 2011. In addition, state department and local governments recently have issued a series of policies to create a better development environment for security industry.

The four main streams of digitalization, high definition, networking and intelligentialize will multiply output value of security products. It means one whole set of device should be updated so that it needs a large investment to put into the advanced equipments accordingly. More advanced and intelligent device signals that security and protection entered a new age of intelligence application. Hence the investment of software application platform in safety industry will increase significantly. The security & protection market is split into three sub-segments by some analysts, such as installation, application update and operation. It was the first year to adopt intelligent application in domestic market in 2013. Especially in first tier cities, company income grew greatly. Due to strength disparity, strong companies with customer resource, capital flow and platform technology should be focused on when choosing.

Minsheng Securities believes urbanization will continue increasing constantly in the coming ten years so that the population gathering needs much more investment in public security. From the angle of international experience, urbanization will not slow down until it arrives at 70%. So Prime Minister Li Keqiang than one time emphasizes it is the most potential factor to expand domestic demand and it is also an very important basis for economic restructuring. Our urbanization rate is 50% round so that we should speed up its construction. 

In a word, accelerating safe cities construction, the outlook of security application, focusing on the field of high definition and intelligent surveillance, will be infinitely bright. Choose listed companies with the three advantages of customers, capital flow and technology. Pay proper attention to the leading stocks, such as Hikvision, UOB, NetPosa, AVCON and EGOVA.



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