Investment Rating - The report assigns a "Buy" rating for the company, indicating an expected return exceeding 10% relative to the CSI 300 index over the next six months [1][5][10]. Core Insights - The company, Hengxuan Technology (688608), has achieved record quarterly performance, benefiting from the surge in smart terminal demand. The main business focuses on the research, design, and sales of ultra-low-power wireless SoC chips, including wireless audio chips, smart wearable chips, smart home chips, and wireless connectivity chips [1][4]. - In the first half of 2024, the company reported revenue of 1.531 billion yuan, a year-on-year growth of 68.26%, and a net profit attributable to shareholders of 148 million yuan, a year-on-year increase of 199.76% [1][4]. Summary by Sections Company Overview - Hengxuan Technology specializes in ultra-low-power wireless computing SoC chips, with products widely used in smart wearables and smart home devices. The company has established a strong market presence in TWS earphones and smartwatches, leveraging advanced technologies and partnerships with major brands [1][4]. Financial Performance - For Q2 2024, the company achieved revenue of 878 million yuan, reflecting a year-on-year growth of 66.80% and a quarter-on-quarter growth of 34.45%. The net profit for the same quarter was 120 million yuan, with a year-on-year increase of 140.00% and a quarter-on-quarter increase of 334.87%, marking a historical high for a single quarter [1][4]. Market Position and Growth Drivers - The company has a diverse customer base, including major global brands such as Samsung, OPPO, Xiaomi, and Huawei, which provides a competitive advantage. The rise of cloud-based AI models is expected to further drive demand for wearable devices, aligning with the company's focus on ultra-low-power computing solutions [1][4]. - The report anticipates continued growth in the wearable device segment, with new product launches and increased market share contributing to revenue growth in the coming years [4][5]. Revenue Projections - Revenue projections for 2024 to 2026 indicate a steady increase, with expected revenues of 3.084 billion yuan in 2024, 3.814 billion yuan in 2025, and 4.286 billion yuan in 2026. The net profit is projected to reach 209 million yuan in 2024, 297 million yuan in 2025, and 406 million yuan in 2026 [5][6].
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