Hangjin Technology's performance in the first quarter increased by more than 3 times, and it is committed to building a technology-based listed enterprise

Recently, Hangjin Technology Co., Ltd. (stock abbreviation: Hangjin Technology; stock code: 000818. SZ) released its first quarter 2024 results. In the first quarter, Hangjin Technology achieved operating income of 1.627 billion yuan, a year-on-year increase of 97.7%, and net profit attributable to the parent company of 50.6046 million yuan, a year-on-year increase of 304.92%.

The original main business of Hangjin Technology was the traditional chemical industry represented by caustic soda, propylene oxide and polyether. In 2017, Hangjin Technology expanded to the field of integrated circuits through mergers and acquisitions, and in 2023, Hangjin Technology actively deployed the computing infrastructure business and opened the second growth curve of the company's development.

Source: Photo.com

Hangjin Technology's performance in the first quarter increased by more than 3 times

In the first quarter, Hangjin Technology achieved an operating income of 1.627 billion yuan, an increase of 97.7% compared with the operating income of 823 million yuan in the first quarter of 2023, a net profit attributable to the parent company of 50.6046 million yuan, an increase of 304.92% compared with the net profit attributable to the parent company of 12.4973 million yuan in the first quarter of 2023, and a net profit attributable to the parent company of 47.5293 million yuan, an increase of 721.19% compared with the net profit attributable to the parent company of 5.7879 million yuan after deducting non-profits in the first quarter of 2023.

In terms of profitability, in the first quarter of 2024, the gross profit margin of Hangjin Technology was 11.82%, an increase of 2.41 percentage points year-on-year, the net profit margin of sales was 4.53%, an increase of 3.65 percentage points year-on-year, and the return on equity was 1.37%, an increase of 1.02 percentage points year-on-year.

In terms of business, the chemical sector is the traditional business of Hangjin Technology, and its main products include caustic soda, liquid chlorine, benzene chloride, propylene oxide, polyether and polyvinyl chloride. In 2017, Hangjin Technology began its business transformation, getting involved in the electronics industry through mergers and acquisitions, laying out the fields of chip design and integrated circuit research and development, and in 2023, Hangjin Technology began to actively deploy the computing infrastructure business.

In terms of business, in 2023, Hangjin Technology will achieve operating income of 3.668 billion yuan, a year-on-year decrease of 14.53%. Among them, the chemical sector achieved operating income of 2.838 billion yuan, a year-on-year decrease of 18.87%, and the electronic sector achieved operating income of 830 million yuan, a year-on-year increase of 4.62%.

In terms of performance, in 2023, Hangjin Technology will achieve a net profit attributable to the parent company of 128 million yuan, a year-on-year decrease of 44.24%. Among them, the chemical sector achieved a net profit attributable to the parent company of 38 million yuan, a year-on-year decrease of 65.86%, and the electronic sector achieved a net profit attributable to the parent company of 90 million yuan, a year-on-year decrease of 24.33%.

Hangjin Technology said that in 2024, the company will focus on Hubei and take Wuhan as an important support for the company's layout of emerging industries, and continue to deepen the transformation of science and technology.

Among them, in the chemical sector, Hangjin Technology plans to produce 384,000 tons of caustic soda, 110,400 tons of propylene oxide, and 69,000 tons of polyether in 2024, and the production equipment of other products will strive to run at full capacity.

Hangjin Technology said that looking forward to 2024, in the context of increased supply, export resilience, and inventory depletion, the chemical industry is in the bottoming stage, and there is a greater possibility of a larger-than-expected recovery in the future. In recent years, the chemical industry chain has continued to shift to China, relying on the advantages of energy, industrial chain integration and large domestic market, the mainland will move towards the road of high-end industrial upgrading after completing the chemical industry agglomeration.

In the electronics sector, Hangjin Technology plans to accelerate the improvement of resource acquisition capabilities and user response speed, and continue to strengthen the statistical analysis of customers and products, continue to dig deep into the needs of existing customers, develop new users, and increase the promotion of key products such as memory.

In the intelligent computing power sector, Hangjin Technology plans to realize the successful online operation of the Shanghai node intelligent computing computing center and accelerate the signing of intelligent computing power services. At the same time, Hangjin Technology will carry out the product research and development and investment of its own brand intelligent computing data center, realize the release of its own brand server and liquid-cooled data center products, and actively promote the construction and development of intelligent computing center through cooperation and joint venture with the government.

Committed to building a technology-based listed enterprise

Hangjin Technology is a listed company under Wuhan State-owned Assets, Wuhan Financial Holding (Group) Co., Ltd. is its controlling shareholder, and its predecessor is Jinxi Chemical General Plant. In recent years, Hangjin Technology has actively transformed into a technology company, and the strategic structure covering "artificial intelligence, electronics, and chemical industry" has basically taken shape.

In 2017, Hangjin Technology successfully acquired Changsha Shaoguang Semiconductor Co., Ltd. (hereinafter referred to as Changsha Shaoguang) and Wolters Kluwer Electronic Module (Shenzhen) Co., Ltd. (hereinafter referred to as Wolters Kluwer), two military enterprises, to realize a new pattern of two-wheel drive and wings flying together in the chemical and military business.

According to the announcement, Changsha Shaoguang is a supplier of integrated circuit series products for the Continental Army, which are widely used in aviation, aerospace, weapons, ships, electronics and other fields, and the customer system covers major military industrial groups and subordinate units in the mainland, private military enterprises and other key domestic weapons and equipment production enterprises. Changsha Shaoguang can provide military customers with integrated circuit design, packaging and testing and other series of products and services, with integrated comprehensive service capabilities, from the perspective of product form, the company sells military integrated circuit series products.

Wolters Kluwer is mainly engaged in the development, design, production and sales of thick film hybrid integrated circuits, as well as standard SMT surface mount assembly and packaging business based on printed circuit boards, and has nearly 30 years of production and sales experience in the field of standard thick film hybrid integrated circuits. Wolters Kluwer's products are involved in many fields such as communications, CNC machine tools, medical electronics and automotive electronics manufacturing, in addition, Wolters Kluwer has begun to extend to the field of military integrated circuits.

In terms of business, at present, the chemical sector is still the main source of revenue for Hangjin Technology, but the electronics sector has become the main source of Hangjin Technology's performance. In 2023, the operating income of Hangjin Technology's chemical sector and electronics sector will account for 77.38% and 22.62% of its consolidated operating income, respectively, and the net profit attributable to the parent company will account for 29.35% and 70.65% of its consolidated net profit attributable to the parent company, respectively.

In 2023, with the leap and growth of domestic demand for high-performance computing, Hangjin Technology will actively start to lay out the computing infrastructure business. In July 2023, Hangjin Technology established Hangjin (Wuhan) Artificial Intelligence Technology Co., Ltd. (hereinafter referred to as Hangjin Artificial Intelligence).

Hangjin Technology said that the establishment of Hangjin artificial intelligence has three main purposes. Firstly, based on the company's existing business, the semiconductor industry layout will be extended and supplemented through endogenous and epitaxy; secondly, the company's existing business will be integrated and based on the company's IC design business foundation, the R&D and business related to artificial intelligence such as graphics processing chips and memory chips will be collected and expanded, so as to enhance the positioning of artificial intelligence in the company's strategic layout; third, it will actively explore cooperation with industry leaders in the artificial intelligence-related semiconductor industry chain and open the second growth curve.

At the end of 2023, Hangjin Artificial Intelligence will increase its capital by 190 million yuan in cash to Wuhan Chaoqing Digital Intelligence Technology Co., Ltd. (hereinafter referred to as Chaoqing Digital Intelligence) with a total pre-investment valuation of 570 million yuan. After the completion of the capital increase, Hangjin Technology has 46.47% of the voting rights of Chaoqing Digital Intelligence and has become its largest shareholder. Hangjin Technology occupies 3 of the 5 seats on the board of directors of Chaoqing Digital Intelligence, and has sent a financial director, which can control the business activities of Chaoqing Digital Intelligence, and Chaoqing Digital Intelligence has become a holding subsidiary of Hangjin Technology.

According to the announcement, Chaoqing Digital Intelligence mainly provides AI server + lossless network + optical connection overall solution for data center, high-performance computing, edge computing, artificial intelligence and other application scenarios, and the main equipment involved is server, GPU, DPU, smart network card, switch and optical module, etc., positioning itself as a provider of overall computing power and network solutions, and is an elite partner of NVIDIA Compute (GPU) and Networking (networking).

Hangjin Technology said that it will take Hangjin artificial intelligence as the carrier and Chaoqing Digital Intelligence technical team as the support to provide full-stack services including server/IB network equipment cluster architecture and landing scenario solutions, and computing power leasing.

In January 2024, Hangjin Artificial Intelligence, Chaoqing Digital Intelligence and Unisplendour Xiaotong Technology Co., Ltd. signed a Strategic Cooperation Framework Agreement to establish a strategic partnership on NVIDIA's latest generation GPU product cluster, NVIDIA Mellanox Infini-band network, NVIDIA BlueField-3 DPUs, and the provision of software and services.

In February 2024, Hangjin Technology announced that Hangjin Artificial Intelligence signed the "Computing Service Contract" with Wuhan Maiyi Information Technology Co., Ltd., Beijing Yiqilian Technology Co., Ltd., and Shanghai Fanchao Digital Technology Co., Ltd. to provide computing power services to three companies, with a total amount of 845.6 million yuan including tax in the three service contracts Changsha Shaoguang signed a sales contract with Xiamen Wuxin Technology Co., Ltd. to sell computing power equipment with a total amount of 314.37 million yuan including tax.