Author: Sunny
On the evening of February 22, Hengxuan Technology (688608. SH) released a performance report saying that in 2021, it achieved revenue of 1.765 billion yuan, an increase of 66.36% year-on-year; and achieved a net profit of 408 million yuan, an increase of 105.45% year-on-year.
Source: Hengxuan Technology Announcement
For the substantial growth in performance, Hengxuan Technology said that the brand TWS headset market continued to grow, its new products iterated rapidly, the market share was further consolidated and improved, and the Bluetooth audio business achieved revenue of 1.411 billion yuan, an increase of 60.15% year-on-year; the second generation of WiFi SoC chips and the first generation of smart watch chips were mass-produced and introduced to the market, becoming a new growth point driving performance; using idle funds to manage money, forming an investment income of 107 million yuan.
Hengxuan Technology is a chip design company, focusing on the development and sales of wireless audio platform PF SOC chips, the main customers include Huawei, Samsung, OPPO, Xiaomi and other mobile phone manufacturers, as well as HARMAN, SONY, Magic, Wanderer and other professional headphone manufacturers, products in the non-Apple brand market share in the head.
As of February 23, Hengxuan Technology closed at 245.96 yuan / share, up 3.78%, with a total market value of 29.515 billion yuan.
The bluetooth headset market size maintained high growth but intensified competition
IDC's report shows that in the first half of 2021, China's wireless Bluetooth market shipped 53.74 million units, an increase of 26.8% year-on-year. Among them, true wireless Bluetooth headsets grew the most, with shipments of 36.25 million units in the first half of the year, an increase of 32.1%; neck-worn Bluetooth headsets shipped 11.89 million units in the first half of the year, an increase of 12.2%; head-mounted Bluetooth headset shipments in the first half of the year were 5.14 million units, an increase of 24.6%.
China's wireless Bluetooth headset market scale continues to grow, attracting many players have entered, to the true wireless Bluetooth headset TWS as an example, its industrial chain in the upstream for component suppliers, mainly including audio chips, batteries, acoustic devices, etc., on behalf of the enterprise has Hengxuan Technology, Zhan Rui, Luoda, etc.; the midstream for OEM/ODM manufacturers, mainly for processing and assembly enterprises, on behalf of the enterprise has Luxun Precision, Fengheyuan, etc.; the downstream for terminal brand manufacturers, mainly for mobile phone brand owners, traditional headphone manufacturers, third-party manufacturers. In recent years, some Internet audio and video companies have begun to involve in the field of headphones, launching corresponding brand headphones, such as NetEase Cloud launching NetEase Cloud wireless headphones, Baidu launching its small noise-canceling headphones, etc.
From the perspective of the global market, Apple's AirPods Pro series products have occupied the first position in the global TWS headphone market share since their release, but with the gradual development of noise reduction technology, more and more electronic or audio manufacturers have entered the TWS headphone track, and the industry competition has become more and more intense. According to Counterpoint data, in the second quarter of 2021, Apple's market share decreased significantly, at 23%, down 12 percentage points year-on-year, Xiaomi's market share exceeded 10%, Samsung reached 7%, JBL, JLab, Wanderer and other brands market share have also increased, TWS headset industry market concentration has decreased compared with 2020, CR3 is 40%. In addition, the average wholesale price of TWS headphones showed a downward trend, with the average wholesale price in 2021 falling by about 19% year-on-year.
The value of the industrial chain is concentrated in the middle and upper reaches
TWS headphone parts composition is more, including main control chips, power management chips, memory chips, batteries, PCB/FPC, acoustic components, etc., from the cost point of view, TWS headphone upstream industry core components of the main control chip, charging compartment (charging, power management), battery, PCB / FPC cost proportion of about 15%, the value of the relatively heavy. Among them, the audio chip, as the most core component, has certain technical barriers. In addition, PCB/FPC boards and batteries also require large-scale capital investment and research and development, so parts manufacturers in the upstream industry can enjoy the high-value dividends brought by the TWS headset market. For example, Ewell Lithium Energy is mainly engaged in power batteries and button batteries, with a gross profit margin of 23%-29%; Hengxuan Technology is mainly engaged in main control chips, with a gross profit margin of 36%-39%; Pengding Holdings is mainly engaged in circuit board design, with a gross profit margin of 16%-23%.
In addition to upstream components, the OEM/ODM machine is the most valuable link in the TWS headset industry chain, accounting for up to 40% of the cost. According to the head leopard survey, the overall cost of Apple Airpods is about 600 yuan, and the average cost of the Android TWS headset brand is about 200-300 yuan. The TWS headphone manufacturing process involves 30 manufacturing processes and 12 test processes, which in turn leads to high manufacturing costs for TWS headphones.
As the domestic TWS market continues to develop, related companies are expected to continue to benefit from it, in addition, some companies are also extending the industrial chain, intending to gain more voice.
(This article is for reference only and does not constitute investment advice, and you do so at your own risk)