Hengxin Technology reported QQ3 2024 revenue of 702.33 million CNY, up 18.31% year over year (YoY) and 25.94% quarter over quarter (QoQ). Gross profit reached 128.55 million CNY, yielding a gross margin of 18.30%, while EBITDA was 45.21 million CNY and operating income stood at 36.34 million CNY (operating margin approximately 5.17%). Net income was 7.80 million CNY with a net margin of 1.11% and basic earnings per share (EPS) of 0.0168 CNY. The quarter shows robust top-line expansion driven by demand for RF coaxial cables used in mobile networks, but profitability was modest by historical standards due to a combination of higher operating expenses and a non-operating drag (total other income/expenses negative 13.78 million CNY) weighing on pretax results.
On the balance sheet, Hengxin maintained liquidity strength with cash and cash equivalents of 861.9 million CNY and total cash plus short-term investments of about 891.6 million CNY against total debt of 1.50 billion CNY and net debt of roughly 0.64 billion CNY. Liquidity ratios remain healthy (current ratio 2.38; quick ratio 2.20; cash ratio 0.701), yet the company exhibits a sizable accounts receivable balance (1272.5 million CNY) and a relatively extended days sales outstanding (DSO ~163 days) indicating working capital intensity. Valuation metrics show a subdued earnings profile (P/E ~13.4x) alongside a strong price-to-book support (P/B ~0.27x), suggesting the market discounts the near-term earnings fragility while pricing in longer-term growth potential. A comparative lens with peers indicates Hengxin trades at a lower P/B versus some regional equipment peers, underscoring the need for margin stabilization to justify multiple expansion.
Key Performance Indicators
Revenue
702.33M
QoQ: 25.94% | YoY:18.31%
Gross Profit
128.55M
18.30% margin
QoQ: 22.30% | YoY:13.32%
Operating Income
36.34M
QoQ: 7.68% | YoY:-15.22%
Net Income
7.80M
QoQ: -41.33% | YoY:-20.28%
EPS
0.02
QoQ: -48.31% | YoY:-33.33%
Revenue Trend
Margin Analysis
Key Insights
Cash and cash equivalents: 861.904 million CNY; Total cash and short-term investments: 891.553 million CNY
Total assets: 4,666.187 million CNY; Total liabilities: 2,319.095 million CNY; Total stockholders’ equity: 1,561.878 million CNY
Long-term debt: 1,074.351 million CNY; Short-term debt: 427.359 million CNY; Net debt: 639.806 million CNY
Receivables: 1,272.534 million CNY; Inventory: 227.182 million CNY; Payables: 633.966 million CNY
Valuation and Efficiency:
Financial Highlights
Revenue: 702.33 million CNY, YoY +18.31%, QoQ +25.94%
Gross Profit: 128.55 million CNY, GM 18.30%, YoY +13.32%, QoQ +22.30%
EBITDA: 45.21 million CNY, EBITDA Margin ~6.44%
Operating Income: 36.34 million CNY, Op Margin ~5.17%, YoY -15.22%, QoQ +7.68%
Net Income: 7.80 million CNY, Net Margin 1.11%, YoY -20.28%, QoQ -41.33%
EPS: 0.0168 CNY, Diluted EPS 0.0168 CNY, YoY -33.33%, QoQ -48.31%
Tax Rate (effective): ~11.5%
Balance Sheet:
- Cash and cash equivalents: 861.904 million CNY; Total cash and short-term investments: 891.553 million CNY
- Total assets: 4,666.187 million CNY; Total liabilities: 2,319.095 million CNY; Total stockholders’ equity: 1,561.878 million CNY
- Long-term debt: 1,074.351 million CNY; Short-term debt: 427.359 million CNY; Net debt: 639.806 million CNY
- Current ratio: 2.38; Quick ratio: 2.20; Debt ratio: 0.322; Debt/equity: 0.961
- Receivables: 1,272.534 million CNY; Inventory: 227.182 million CNY; Payables: 633.966 million CNY
Valuation and Efficiency:
- Price to Earnings: ~13.4x; Price to Book: ~0.27x; Price to Sales: ~0.60x; Enterprise Value Multiple: ~23.4x
- Asset turnover: ~0.151x; ROE: ~0.50%; ROA: ~0.17%; Cash flow data limited in the period; Operating cash flow not disclosed in the provided table.
Key Takeaways: The quarter demonstrates top-line momentum consistent with telecom network investment cycles, yet the bottom line remains under pressure from non-operating items and persistent working-capital intensity. Investors should watch improvements in non-operating items, receivables management, and any visible margin stabilization.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
702.33M
18.31%
25.94%
Gross Profit
128.55M
13.32%
22.30%
Operating Income
36.34M
-15.22%
7.68%
Net Income
7.80M
-20.28%
-41.33%
EPS
0.02
-33.33%
-48.31%
Key Financial Ratios
currentRatio
2.38
grossProfitMargin
18.3%
operatingProfitMargin
5.17%
netProfitMargin
1.11%
returnOnAssets
0.17%
returnOnEquity
0.5%
debtEquityRatio
0.96
priceToBookRatio
0.27
priceEarningsRatio
13.44
Net Income vs. Revenue
Expense Breakdown
Management Commentary
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Forward Guidance
No explicit forward-looking guidance was disclosed in the provided data. Given the sector backdrop of ongoing 5G network rollout and expansion into international markets, Hengxin could benefit from sustained demand for RF coaxial cables and related antenna solutions. Key factors to monitor for next periods include: (1) trajectory of telecom capex and 5G/6G deployment plans from operators, (2) raw material cost trajectory and supply chain resilience, (3) working capital management to reduce DSO and improve cash conversion, (4) potential operating-efficiency initiatives to lift margins, and (5) currency exposure given the CNY-denominated reporting in a globally sourced cost structure.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
1085.HK Focus
18.30%
5.17%
0.50%
13.44%
1075.HK
36.80%
23.70%
2.48%
16.09%
1079.HK
-8.44%
-53.40%
-1.18%
-3.05%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Hengxin presents a nuanced risk-adjusted opportunity. The QQ3 2024 results confirm revenue resilience in a capex-driven telecom environment, but margin and earnings leverage remain constrained by non-operating items and working-capital intensity. The valuation suggests the stock currently trades at a modest earnings multiple (P/E ~13.4x) and a deeply discounted price-to-book (~0.27x), implying the market prices in high uncertainty or limited earnings visibility in the near term. A constructive investment thesis would require: (1) stabilization or improvement in net margins and free cash flow generation, (2) evidence of better receivables management and working-capital efficiency, and (3) a clear path to deleveraging or more sustainable debt service metrics. In the near term, catalysts include continued 5G/6G deployment demand and success in expanding international market penetration, while risks include cyclical telecom capex fluctuations, competitive pricing pressure, and external financing conditions. Overall, a balanced view would position Hengxin as a moderate-risk, moderate-return exposure within the Chinese telecom equipment supply chain, with outsized upside if margin discipline and cash flow improvements materialize.
Key Investment Factors
Growth Potential
Limited near-term upside unless margins improve; potential upside from sustained 5G/6G deployment and international expansion into high-growth telecom markets; new product lines in antennas and testing services could broaden the addressable market.
Profitability Risk
High working-capital intensity (DSO ~163 days) and sizable receivables; elevated debt load with net debt ~639.8 million CNY; reliance on telecom capex cycles; potential competitive pressure and supply-chain volatility; regulatory and geopolitical risks affecting global demand.
Financial Position
Solid liquidity with cash and equivalents ~861.9m CNY and current ratio of 2.38; leverage remains above 0.9x debt/equity, and long-term debt constitutes a meaningful portion of the capital base; asset-light segments and asset-heavy balance sheet require ongoing capex discipline.
SWOT Analysis
Strengths
Established RF coaxial cable and telecom equipment supplier with diversified product lines (RF cables, antennas, base station components).
Presence in multiple markets (China, India, international) and exposure to ongoing telecom infrastructure buildouts.
Healthy liquidity cushions and a stable asset base with substantial cash reserves and low cash burn in the quarter.
Low P/B suggests potential undervaluation relative to net asset base.
Weaknesses
Low net margin (1.11%) and modest ROE (0.50%), indicating earnings efficiency challenges.