Hengxin Technology Ltd (1085.HK) Q2 2025 Earnings Report

Hengxin Technology’s QQ2 2025 results show a meaningful top-line rebound, with revenue of 511.10 million CNY, up 45.5% year over year and 100.0% quarter over quarter. Gross margin held steady around 18.3%, and EBITDA reached 60.25 million CNY, supporting positive operating income of 15.58 million CNY. However, the company reports a net loss of 35.21 million CNY primarily due to a large income tax expense (35.55 million CNY) and a net negative impact from other income/expenses. These tax charges create a disconnect between pre-tax profitability (3,000 CNY) and reported net income, underscoring the tax and non-operating item drag on bottom-line performance. From a liquidity and balance sheet perspective, Hengxin remains cash-rich with approximately 1.314 billion CNY in cash and cash equivalents. The quarterly debt burden remains substantial (short-term debt of 723.53 million CNY and long-term debt of 1,050.59 million CNY; total liabilities of 2.959 billion CNY against 1.493 billion CNY in equity), yielding a net debt position of about 459.48 million CNY. The current ratio stands at 1.95 and the quick ratio at 1.82, signaling adequate near-term liquidity, but leverage remains a meaningful consideration for equity investors. Operationally, Hengxin’s revenue mix remains tied to RF coaxial cables, telecommunications equipment, and related services, with a gross margin in the low- to mid-teens and a clearly positive EBITDA trajectory for the quarter. The stock trades with a negative trailing P/E, a modest price-to-book near 0.35x, and an EV/EBITDA multiple in the mid-teens, implying that the market may be pricing in a credible recovery path or potential normalization of profitability, contingent on tax drag and ongoing cost discipline.