Hangzhou Hikvision Digital Technology Co. Ltd.

That said, Hikvision's overseas businesses, particularly in North America, could be adversely affected. Some of these overseas customers could reduce their orders to Hikvision to meet stringent regulatory requirements or to avoid reputational risks. Reduced orders could be partly offset by healthy sales growth in other regions. Specifically, markets outside North America and Europe account for over 50% of Hikvision's overseas revenues. The stable outlook on Hikvision reflects our expectation that the company's placement on the Entity List will not materially affect competitiveness. We believe the company will maintain its market leadership and net cash position over the next 12-24 months. In addition, we expect Hikvision to remain a strategically important subsidiary of its parent, China Electronics Technology Group Corp.

...We believe Hangzhou Hikvision Digital Technology Co. Ltd.'s placement on the U.S. Entity List will not have material impact on the company's operation. We expect resumption of some key suppliers will largely reduce the need for Hikvision to find immediate alternatives for suppliers or solutions. This implies lower execution risk for Hikvision, because finding alternative suppliers or solutions may take longer than the company's six-month stockpile of key components, as well as potentially impact product quality. We also expect other U.S. suppliers to develop workaround solutions to overcome restrictions placed by the U.S. Entity List in the coming months. That said, Hikvision's overseas businesses, particularly in North America, could be adversely affected. Some of these overseas customers could reduce their orders to Hikvision to meet stringent regulatory requirements or to avoid reputational risks. Reduced orders could be partly offset by healthy sales growth in other regions. Specifically,...

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