event

hengxuan technology released 2023 annual report: the company realized operating income of 2.176 billion yuan in 2023, up 46.57 from the same period in 2022; The net profit returned to the parent was 0.124 billion yuan, up 0.99 from the same period in 2022. The net profit deducted from the parent was 28.6123 million yuan, up 135.96 from the same period in 2022.

investment points

the market performance of the main products is bright, and the customer advantage is obvious

thanks to the global economic recovery, the consumer market is gradually picking up, and the downstream demand is showing a growth trend. the company realized operating income of 2.176 billion yuan in 2023, up 46.57 from the same period in 2022, of which Bluetooth audio products realized revenue of 1.529 billion yuan, accounting for 71% of the revenue. The company based on the 12nm FinFET process research and development of a new generation of BES2700 series wearable master chip market recognition continued to improve, driving the rapid growth of revenue scale. At the same time, through continuous product technology iteration and market verification, the company's end customers have covered global leading enterprises in various industries, including global mainstream Android mobile phone brands such as Samsung, OPPO, Xiaomi, Glory, Huawei and vivo, professional audio manufacturers such as Harman, Anker Innovation, Wanderer and Wanmo, Internet companies such as Ali, Baidu and Google, and home appliance manufacturers such as Haier, Hisense and Gree. The customer structure has been continuously optimized, brand competitiveness continues to strengthen, is expected to become the long-term driving force to support performance.

the new generation of BES2700 series chips are rapidly increasing in quantity, and the downstream application scenarios are continuously expanding

in 2023, the company's new generation of BES2700 series of smart wearable chips are rapidly increasing in quantity, which have been applied to wearable products of many domestic and foreign brand customers. besides TWS headphones, sports watches and bracelets, they are further extended to smart watches and smart glasses products, and the downstream application scenarios continue to be diversified. At the same time, for the entry-level sports watch and bracelet market, the company has introduced a BES2700iBP of wearable SoC chips for this market. Compared with the previous generation of BES2500 series, the chip has significantly reduced standby and operating power consumption, enabling terminal products to achieve a better balance between standby time and operating fluency, obtaining rapid market recognition, and realizing mass production in watch and bracelet projects of many first-line brands.

Focus on R & D investment, continuous iteration of core technologies

The company relies on the platform advantages of AIoT master chip manufacturers, and continues to strengthen the horizontal and vertical extension of technology. In 2023, the company spent 0.55 billion yuan on research and development, an increase of 25.04 percent over the previous year, and the total number of research and development personnel at the end of the year was 592, accounting for 85.80 percent of the research and development personnel. The company applied for 115 new invention patents and obtained 52 invention patents approval. At the same time, the company continues to increase research and development efforts in various product areas, a new generation of 6nm smart wearable chip BES2800 successfully flow. The chip adopts advanced 6nm FinFET technology, and a single chip integrates multi-core CPU/GPU, NPU, large-capacity storage, low-power Wi-Fi and dual-mode Bluetooth. It can provide strong computing power and high-quality seamless connection experience for wearable devices, especially TWS headphones, smart watches, smart glasses, smart hearing aids and other products. At present, the chip has entered the market promotion stage and is expected to achieve mass production in 2024.

profit forecast

it is predicted that the company's annual revenue from 2024 to 2026 will be 27.97, 34.86 and 4.382 billion yuan respectively, EPS will be 2.51, 4.19 and 5.09 yuan respectively, and the current stock price will correspond to PE of 44.6, 26.7 and 22.0 times respectively. by focusing on research and development investment, the company will realize continuous iteration of core technologies, continuously expand application scenarios of new products, achieve high revenue growth, and further strengthen customer cooperation stickiness, lay the foundation for the company's future brand strategy and maintain a "buy" investment rating.

risk tips

industry competition intensifies risks, product iteration risks due to technology upgrades, intellectual property risks, commissioned processing and production and supplier concentration risks, inventory price risk, downstream demand is less than expected risk.