On the morning of April 17th, Hytera Communications Corporation Limited (002583.SZ) issued an announcement stating:

"The United States Court of Appeals has issued an order to suspend the execution of the preliminary injunction and fines imposed by the trial court on the company, which takes effect immediately. The company has immediately resumed the sale of all product series globally."

As soon as the news broke, Hytera's stock price soared to its daily limit!

To understand this matter, we need to go back 10 days.

On the evening of April 7th, Hytera announced that it had recently received an order from a U.S. court, which determined that the company had failed to fully comply with its injunction, temporarily prohibiting the company from selling two-way radio technology products globally and imposing a daily fine of one million U.S. dollars until full compliance with the injunction is achieved.

Advertisement

What is an "injunction"?

An injunction is a court order issued to parties over which the court has jurisdiction, applied for by one party and directed at another party, to prevent them from initiating or continuing litigation in a foreign court over the same or similar disputes.

In simpler terms, if one party sues in the United States, other national courts have no authority to interfere!

Let's go back to 2017.

In March 2017, Motorola sued Hytera in a U.S. court for infringing on its trade secrets; in August 2018, Motorola added a copyright infringement claim to the lawsuit; in February 2020, the jury in the case ruled that Hytera should pay Motorola $765 million in damages.What is the concept of 765 million US dollars?

In 2016, Hytera's operating income was 3.436 billion yuan, and the net profit was 402 million yuan. In other words, the compensation itself has far exceeded the company's operating income, equivalent to the sum of the company's net profits for more than 10 years.

In June 2022, Hytera filed a lawsuit with the Shenzhen Intermediate People's Court, requesting that its newly designed H-series products do not infringe on Motorola's trade secrets and copyrights; subsequently, Motorola submitted an anti-suit injunction motion to the US court, demanding that Hytera withdraw the lawsuit in Shenzhen.

Later, the US court approved the motion, and Hytera's products were banned from sale globally.

Let's not discuss the law itself, but one thing is certain: the lawsuit by Motorola against Hytera is not only a competition between enterprises but also a contest between the courts of China and the United States over jurisdiction and adjudication rules. Of course, it is also a contest between China and the United States on intellectual property and the judiciary.

So, this matter is very complex.

Hytera is a provider of professional communication and solutions, known as "little Huawei" in the field of private network communication, and is a leading company in professional wireless communication equipment such as walkie-talkie terminals and trunking systems.

In fact, from the lawsuit by Motorola against Hytera, it can be seen that Motorola has always regarded Hytera as a thorn in its side, reflecting the competitiveness of the company from the side.

In 1992, the chairman of Hytera came to Shenzhen and started his entrepreneurial journey from a small counter in Huaqiang North, establishing the predecessor of Hytera, Haoyitong Technology Co., Ltd.

In 1997, Hytera planned to "go global"; starting in 2003, Hytera began a series of mergers and acquisitions, continuously improving its technical products and global market channels; in 2012, it acquired the RMR business of German Rohde & Schwarz; in 2017, it acquired the Canadian Norsat company.In recent years, Hytera's R&D expenditure ratio has consistently remained above 15%, and its overseas revenue has been maintained at over 50% for many years, making it a truly global company.

However, the operational pressure faced by Hytera is also increasing.

From 2018 to 2022, Hytera's operating income was 6.935 billion yuan, 7.844 billion yuan, 6.109 billion yuan, 5.719 billion yuan, and 5.653 billion yuan, respectively, showing a continuous downward trend.

It is evident that under the well-known special circumstances, the company's growth has significantly diminished compared to the past.

The best performance for Hytera occurred in 2018, with a net profit of 477 million yuan, a year-on-year increase of 94.72%. However, since then, the company's net profit excluding non-recurring gains has turned negative. Of course, the company is also trying its best to turn around the business situation. According to the performance forecast, Hytera's net profit excluding non-recurring gains for 2023 is expected to be 83.75 million yuan, a year-on-year increase of over 40%.

So, for such a company, do you think it represents an opportunity?