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Yangtze Business Daily News● Changjiang Business Daily reporter Zhang Lu

With the continuous expansion of its product lines, Hengxin Technology (688608.SH) achieved strong growth in performance.

On July 15, Hengxin Technology released an announcement on the expected increase in semi-annual performance. In the first half of 2024, the company expects to achieve operating income of approximately 1.531 billion yuan, a year-on-year increase of approximately 68.24%; net profit of approximately 148 million yuan, an increase of approximately 98 million yuan compared with the same period last year, a year-on-year increase of approximately 199.68%.

Hengxin Technology's main business is the research and development, design and sales of smart audio and video SoC chips. Its products are used in low-power smart audio and video terminal products such as smart Bluetooth headsets, WiFi smart speakers, smart watches, etc.

Hengxin Technology said that in the first half of the year, customer demand in the downstream smart wearable and smart home fields continued to grow, the company's new products and new customer expansion in the smart watch/bracelet market brought results, and the mass production and shipment of the new generation of smart wearable chip BES2800 helped to increase performance.

A reporter from the Yangtze Business Daily noticed that the leading position in product performance has built a strong technological barrier for Hengxin Technology. To this end, the company has continuously increased its R&D investment and improved its product matrix.

From 2021 to 2023, Hengxin Technology's R&D investment was RMB 289 million, RMB 440 million, and RMB 550 million, respectively, showing an increasing trend year by year, reaching a total of RMB 1.279 billion in three years.

Record revenue in the second quarter

Recently, Hengxin Technology disclosed its semi-annual performance forecast, expecting to achieve revenue of approximately 1.531 billion yuan in the first half of 2024, an increase of approximately 68.24%; net profit of approximately 148 million yuan, a year-on-year increase of approximately 199.68%; non-net profit of approximately 112 million yuan, a year-on-year increase of approximately 1873.29%.

According to calculations, in terms of single-quarter performance, Hengxin Technology expects to achieve revenue of approximately 878 million yuan in the second quarter, an increase of approximately 66.76% year-on-year; and achieve a net profit of 120.4 million yuan. The company's single-quarter revenue has set a historical high.

As for the main reasons for the performance growth, Hengxin Technology stated that customer demand in the downstream smart wearable and smart home fields continued to grow, the company's new products and new customer expansion in the smart watch/bracelet market brought results, and the new generation of smart wearable chip BES2800 was mass-produced and shipped.

In addition, the company's substantial revenue growth brought about economies of scale, the period expense rate decreased, and the gross profit margin stabilized and recovered. The sales gross profit margin in the second quarter was approximately 33.40%, an increase from the previous quarter.

In fact, over the past year, Hengxin Technology has achieved outstanding performance in various downstream fields. In 2023, Hengxin Technology achieved operating income of 2.176 billion yuan, a year-on-year increase of 46.57%, and revenue hit a record high; net profit of 124 million yuan, a year-on-year increase of 0.99%.

Among them, the company's Bluetooth audio products achieved operating income of 1.529 billion yuan in 2023, a year-on-year increase of 40.28%, and this business accounted for 71% of the total operating income. The market recognition of the company's new generation BES2700 series wearable main control chips developed based on the 12nm FinFET process continues to increase, driving the rapid growth of the company's revenue scale.

In terms of other businesses, in 2023, Hengxin Technology's smart watches and bracelet products achieved operating income of 484 million yuan, a year-on-year increase of 66.90%, accounting for 22% of the company's total operating income; other products achieved operating income of 163 million yuan, a year-on-year increase of 55.80%, and the company's revenue structure was further diversified.

After continuous product technology iteration and market verification, Hengxin Technology's end customers have covered global leading companies in various industries, including global mainstream Android mobile phone brands such as Samsung, OPPO, Xiaomi, Honor, Huawei, vivo, professional audio manufacturers such as Harman, Anker Innovations, Edifier, and Edifier, Internet companies such as Alibaba, Baidu, and Google, and home appliance manufacturers such as Haier, Hisense, and Gree. The customer structure continues to be optimized and brand competitiveness continues to increase.

A total of 195 invention patents have been obtained

According to information, Hengxin Technology was established in Shanghai in 2015 and officially listed on the Science and Technology Innovation Board in 2020. Its main business is the research and development, design and sales of smart audio SoC chips. It provides customers with edge intelligent master control platform chips with voice interaction capabilities in AIOt scenarios. Its products are widely used in low-power smart audio terminals such as smart Bluetooth headsets, type-C headsets, smart speakers, etc.

A reporter from the Yangtze Business Daily learned that Hengxin Technology began to deploy in the field of smart wearables in 2021, successfully mass-produced the first-generation smart watch chip BES2500BP that year, and launched the industry's first sports watch single chip master control-BES2700BP in 2022.

In 2023, the company's BES2700 series products continued to increase in volume, and its downstream application areas continued to expand. Currently, they are being implemented in TWS headphones, watches, bracelets, smart glasses, etc.

At the same time, Hengxin Technology's new generation of 6nm smart wearable chip BES2800 has been successfully taped out, integrating multi-core CPU/GPU, NPU, large-capacity storage, low-power Wi-Fi and dual-mode Bluetooth. Its products have now entered the market promotion stage and are expected to be mass-produced in 2024.

As we all know, the chip design industry is a technology and talent-intensive industry, and maintaining a high level of R&D investment is the key to a company's long-term competitiveness. Therefore, Hengxin Technology continues to invest in R&D, and its product competitiveness has steadily improved.

The financial report shows that from 2021 to 2023, Hengxin Technology's R&D investment was 289 million yuan, 440 million yuan, and 550 million yuan, respectively, increasing year by year. The cumulative R&D investment in three years was 1.279 billion yuan, and its R&D investment accounted for 16.38%, 29.62% and 25.27% of its revenue, respectively.

As of the end of 2023, the total number of Hengxin Technology's R&D personnel is 592, accounting for 85.80%. At present, the company has established R&D centers in Beijing, Shanghai, Shenzhen, Chengdu, Wuhan, Xi'an, Hangzhou and other cities, and the strength of the R&D team has been further enhanced.

In 2023, Hengxuan Technology applied for 115 new invention patents and obtained approval for 52 invention patents. As of the end of 2023, the company has applied for 488 invention patents and obtained approval for 195 invention patents.