Indeed, this issue is a brief review of a technology innovation company, Hengxuan Technology, as requested by the comments. With the character ‘Xuan’ in its name, it is clear that it has some connection to the esoteric (vocal music). To be honest, I didn’t pay much attention to the science and technology innovation board when it was first established, mainly due to the quality of the companies. Even now, I prefer to wait at least a year after a company goes public to have a complete comparison of its financial reports before and after listing, so that I can have a concrete framework of the company. Alright, enough chit-chat, let’s start this brief review.
Let’s speak English.
日本語を話してください
➡️ Let’s speak Chinese
——————-Start
Before discussing the innovation company, we need to disinfect and clear the mines.
First, wash your hands.
Step one, put your hands in the sink and squeeze the hand sanitizer…….
Then
Stop it,,,,,
I’m serious.
As for equity pledges, currently found to be 0.
No restrictions on share release.
Goodwill is 0.17%
Only found a 0.1% reduction in March this year.
As for lawsuits, none found, zero.
This cleanliness makes me feel like a Lin Daiyu in a brothel, untainted by the mud.
After clearing the mines, let’s get to the main topic.
First
Let’s take a look……………..
Okay, I’m serious, I’ll continue.
Let’s take a simple look at the current market cap of 42 billion with a dynamic PE of 60.
The business focuses on low-power wireless chips.
Various low-power SoCs account for the main revenue.
The company currently holds a large market share.
In fact, I briefly reviewed this company and feel that it is still focused on products as a breakthrough point, so let’s take a look at the financial data.
This year’s mid-year report shows a doubling growth rate.
Net profit margin also increased by 63%, but both the non-recurring profit and net profit margin have shown a significant slowdown compared to last year’s explosive growth.
Looking at financial expenses, the company’s interest-bearing debt is not large.
As a technology company on the science and technology innovation board, R&D investment must be examined. There is also double-digit growth.
Note here, the turnover cycle data is negative. This turnover data is often a leading indicator, indicating that there may be a continued slowdown in the second half of the year. This deepens my impression of the company’s product cycle from the financial data.
So far, we have finished discussing the finances. Next, let’s return to the discussion logic of the company’s product ceiling, because without a second product growth curve, this is precisely where the overall ceiling of the company lies.
Currently, with the semiconductor industry being highly sought after,
the market prospects for the company’s products are overall positive, especially against the backdrop of the rapid popularization of AIoT (Artificial Intelligence of Things) and smart wearable devices. The company, leveraging its technological advantages and customer resources, has the potential for sustained growth.
Next, let’s analyze several key product directions:
1. Smart Audio Chips (TWS Earbuds, etc.)
The penetration rate of TWS earbuds still has room for improvement, and AI function upgrades bring new growth points.
Hengxuan Technology is in a leading position in the domestic market for TWS earbud main control chips, with clients including major brands like Huawei, OPPO, Xiaomi, and Samsung.
High-end chips like the BES2800 use a 6nm process, integrating CPU/GPU/NPU, supporting advanced features like active noise cancellation and LE Audio, making them highly competitive. With the development of new technologies such as AI earbuds and spatial audio, the unit price and value of the chips are expected to continue to rise.
2. Smart Watch/Band Chips
This business is expected to grow by 116% year-on-year in 2024, with shipments exceeding 40 million units, becoming one of the company’s fastest-growing product lines. The company is transitioning from the M core to the A core platform.
Let me pause here to explain the significance of this transition from M to A.
In the chip field, M core and A core refer to the ARM architecture’s Cortex-M and Cortex-A, which target different application scenarios and have significant differences:
Here is a comparison chart.
Transitioning from M core to A core means that its products are upgrading from simple control tasks (like step counting and heart rate monitoring) to supporting complex applications (like running operating systems, supporting AI algorithms, voice assistants, etc.). This is an important sign of the high-end and intelligent evolution of its product line, so to put it simply, the future added value of the products will be higher.
This also reflects the domestic economic transformation from low added value to high added value.
Continuing on,
The new generation of chips will support higher performance applications, such as health monitoring and voice assistants.
The smart watch market is currently in a functional upgrade phase, with Micro-LED screens, heart rate/oxygen monitoring, etc., driving replacement demand.
The smart watch market is performing steadily, and Hengxuan is expected to continue benefiting.
3. AI Glasses Chips
AI glasses are seen as the next generation of smart terminals, with 2025 being regarded as the “AI Glasses Year” in China, with companies like Xiaomi, Huawei, and ByteDance all making moves in this area.
Hengxuan has launched the BES2700 chip for Xiaomi AI glasses and is developing a high-performance chip to compete with Qualcomm’s AR1, which has lower power consumption and stronger computing power.
The value of these chips is significantly higher than traditional earbud chips (rising from a few yuan to hundreds of yuan), which is what I mentioned earlier about high added value and the main growth point for profit margins. There are two aspects: one is volume, and the other is price. The turnover rate mentioned above represents volume, while price is very optimistic here.
AI glasses are on the verge of an explosion, as I mentioned in my earlier article on Mingyue lenses. Hengxuan has a first-mover advantage and technological reserves.
4. Smart Home and Wi-Fi Chips
The company’s second-generation Wi-Fi/BT dual-mode SoC has been mass-produced and is applied in smart speakers, home appliances, and other terminals.
With the promotion of the Matter protocol and the popularization of whole-home intelligence, the demand for low-power, highly integrated main control chips will continue to grow.
Market Prospects:
There is great market potential, but competition is fierce, and we need to see subsequent product iterations and customer expansions.
In summary: Hengxuan Technology has the most growth potential in the fields of AI glasses and smart watches, with the prospect of achieving rapid growth in the next 2-3 years; the TWS earbud business is stable and remains the foundation; the smart home business is a medium to long-term focus. Overall, the company has optimized product structure, high technical barriers, and strong customer resources, possessing a strong medium to long-term growth logic. The key profit growth point lies in the enhancement of the chip’s added value, which I have already mentioned. If investors have bought into this company, how to scale up the high-end chip volume should be a key project to observe in the future, and it should also be raised in shareholder meetings or investor conferences.
Based on the current mid-year report, a linear projection should reach 150% of 2021, as the market value is currently close to 2021, so I judge that the company still has at least 50% upside potential.
Additionally, the company is positioned in the semiconductor market, specifically digital chip design, and the premium rate in this sector is currently evident to all. Therefore, on the basis of 50%, I boldly assign an additional 50% premium, estimating the market value to reach around 60-80 billion by the end of the year. This is my usual method for valuing companies.
One-click three connections, oh.
SO
2025-9-7