Hengxin Technology Ltd (1085.HK) Q3 2024 Earnings Report

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.