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Star Shareholders, Luxury Customer Group, TWS Chip Manufacturer Hengxuan Technology Will Soon Land On The Science And Technology Innovation Board

2020/9/1 10:43:00 124

StarShareholderCustomer GroupTWSChipManufacturerHengxuan TechnologyKechuang Board

What products are the most popular in the current consumer electronics industry?

In the answer to this question, TWS Bluetooth headset must have a name.

In recent years, the wearable device market demand is strong. In this year's A-share semi annual report, Changying precision, Lixun precision, gol shares and other companies have achieved outstanding growth, which is inseparable from the help of TWS Bluetooth headset. In addition to the brilliant performance, what makes the peers envious are the high share prices of these companies all the way.

For investors, if they fail to catch up with the opportunity of "getting on board" of these leading stocks, they may as well pay attention to a "new partner" to join the TWS concept plate: on August 28, the IPO of hengxuan science and technology innovation board, a chip manufacturer of TWS, was unconditionally held. If there is no accident, it is only a matter of time before landing on the board.

In fact, from the performance growth rate of hengxuan technology, we can see the rapid development of TWS market. From 2017 to 2019, the company achieved operating revenue of 84.5657 million yuan, 330 million yuan and 650 million yuan respectively, and the compound growth rate of business income in the last three years reached 177.00%.

Industry insiders generally believe that the wearable device market is expected to continue to boom in the second half of this year, and related industry chain companies will continue to maintain rapid growth. As the industry's early implementation of active noise reduction Bluetooth single chip mass production and shipment manufacturers, hengxuan technology at this point in the board of science and technology innovation, to the outside world to leave enough room for imagination.

However, the current situation is quite complex. The reporter noted that hengxuan technology needs to obtain the technical authorization of relevant EDA tools and IP suppliers in the R & D process; at the same time, its terminal brand manufacturers began to develop their own chips, which may adversely affect the sustainability of the company's chip application to terminal manufacturers. As the U.S. technology blockade on China intensifies, all these factors add uncertainty to the company's business.

On August 31, the director and Secretary Office of hengxuan science and Technology Co., Ltd. made an exclusive response to the reporters of the 21st century economic report on how to treat the above-mentioned risks.

Luxury shareholders and customers

Opening the history of hengxuan technology, this is actually a young start-up company. Founded in June 2015, the company is only 5 years old, and can only be regarded as a "younger generation" in the qualification ranking of science and technology innovation board.

The company's main business is the R & D, design and sales of intelligent audio SOC chips, which are currently mainly used in low-power intelligent audio terminals such as headphones and smart speakers. Although it was established late, hengxuan technology has turned losses into profits three years after its establishment, benefiting from the development of TWS market demand, and has made a certain reputation in the market.

According to the prospectus, since its establishment, the company has successively developed and passed the certification of several terminal brand manufacturers. At present, the main terminal brand manufacturers of the company's products include Huawei, Samsung, oppo, Xiaomi and other mobile phone brands, as well as professional audio manufacturers such as Harman, Sony and Skullcandy.

Moreover, the sales share from the above-mentioned terminal brands is increasing year by year. During the reporting period, the chip sales revenue of hengxuan technology applied to the products of major terminal brand manufacturers were 13.729 million yuan, 187 million yuan and 489 million yuan respectively, accounting for 16.23%, 56.79% and 75.36% of the operating income respectively.

In the description of its own technology advancement, hengxuan technology said that the company was the early manufacturer of active noise reduction Bluetooth single chip mass production and shipment in the industry, and owned high-performance active noise reduction technology with independent intellectual property rights. Compared with the mainstream Bluetooth chip and active noise reduction chip in the market, the company's single chip solution has the characteristics of low power consumption, low cost and small space occupation.

In addition to having a number of well-known end customers, hengxuan technology has a number of well-known venture capital institutions in the list of shareholders.

According to the prospectus, IDG's two funds hold 17.07% of the company's shares, Beijing integrated circuit design and sealing test equity investment center (limited partnership), a sub fund of Beijing integrated circuit industry fund, holds 3.96% of the shares, and yuanhepuhua, which is participated by the national integrated circuit industry investment fund, holds 1.12%.

In addition, Hubei Xiaomi Changjiang Industrial Fund partnership (limited partnership), the investment entity of Changjiang Xiaomi fund, holds 4.66% of the shares, which is the fifth largest shareholder of the company; Alibaba (China) Network Technology Co., Ltd. holds 3.73% of the shares, which is the tenth largest shareholder of the company, and Shenzhen Venture Capital holds 0.54% of the shares. All of the above three institutions invested and invested in July 2019. In December following, hengxuan technology signed a coaching agreement with CSCI and filed it with the Shanghai Securities Regulatory Bureau. The entry time of Ali and Xiaomi can be described as timely.

It is worth noting that according to the contents of the first reply, 20 shareholders including the above-mentioned shareholders have agreed with hengxuan technology on special rights such as preemption right, joint sale right, investor's right to sell, and the most preferential treatment, but these rights are not mentioned in the declaration submitted by the company.

After being questioned by the Shanghai Stock Exchange, hengxuan technology said that it had cleaned up the special rights enjoyed by shareholders, but the special rights clauses could be restored. After the second inquiry of the Shanghai Stock Exchange, hengxuan technology said that it had terminated the special rights restoration clause on June 9, 2020, 48 days after it announced the declaration draft of the science and technology innovation board.

How to view the contingent risk

When we focus on a company's list of shareholders and customers, what are we focusing on?

In fact, the focus is on the company's market position and industry prospects.

In terms of specific products, during the reporting period, the company's chip sales revenue applied to earphone products accounted for a relatively high proportion, accounting for 99.29%, 93.20% and 95.42% respectively. From this point of view, compared with the leading TWS company in the A-share market, hengxuan technology is actually a more pure TWS concept target.

So, what is the industry status of hengxuan technology?

Liu Kai, an analyst in the electronics industry of Everbright Securities, pointed out that "at present, the active noise reduction earphone mainly adopts the scheme of separating the Bluetooth chip and the noise reduction chip. Hengxuan takes the lead in launching the industry-leading fully integrated solution, integrating the noise reduction function on the Bluetooth chip, which has a leading advantage in power consumption and cost. Among the independent manufacturers, hengxuan, Qualcomm and MediaTek have certain first mover advantages and technology leading advantages, and their products have a high coverage rate among first-class brands. "

In terms of industry prospects, wearable device market is expected to continue to boom, almost becoming the consensus in the industry. This can be seen from the performance forecast of hengxuan technology.

The company estimates that the operating revenue of the company from January to September 2020 will increase by 23.75% to 35.50% compared with the same period in 2019. The main basis is: the company's newly developed brand manufacturer projects are expected to start a large number of shipment in the second half of the year; the market share of brand manufacturers continues to increase, and the application of the company's products in terminal brand manufacturers is also expanding; with the improvement of the domestic epidemic situation, the market demand is expected to recover rapidly in the second half of the year.

However, in the chip industry with technology as the core, hengxuan technology also has troubles in the current technology blockade of China by the United States.

According to the prospectus, the company needs to obtain the technical authorization of relevant EDA tools and IP suppliers in the process of R & D. the main suppliers are cadence, arm, CEVA, etc. As we all know, EDA tool is one of the key links in the development of integrated circuits in China.

"If the international political and economic situation, intellectual property protection and other unexpected or force majeure factors occur, EDA tools and IP suppliers do not grant technology authorization to the company, it will have a significant adverse impact on the company's operation." Hengxuan technology said frankly in the prospectus. In view of the potential risks, hengxuan science and technology director's Office responded to the reporter of the 21st century economic report: "the company has maintained a good and stable cooperative relationship with relevant suppliers."

The end customers are also facing new challenges. At present, the company has terminal brand manufacturers to develop their own chips. For example, Huawei Hisilicon has developed Kirin A1 chip for Huawei freebuds3. This means that the terminal brand manufacturers interrupt or terminate the chip cooperation with the company, and even seize the existing market share.

Hengxuan technology seems not very worried about this. The company told reporters, "as the core device of intelligent terminal equipment, the company's products are directly related to the performance and user experience of the final product. Brand customers are very strict and cautious in choosing chip suppliers. They need long-term product audit and verification to enter their supply system. In the process of new product research and development, terminal brand manufacturers cooperate with chip manufacturers in high degree, so they have formed strong stickiness in long-term cooperation. At the same time, after entering the supply system of brand customers, the successful application experience of products can form a virtuous circle and further expand the company's brand customer range. "

 

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