Juxin Technology's 2024Q2 revenue, gross margin, and net profit to mother all maintained a relatively rapid year-on-year growth trend. The company's Bluetooth audio SoC products have achieved breakthroughs in international first-tier brands, and end-side AI processors continue to expand. Maintain an increase in holdings rating.

Key points to support ratings

Juxin Technology's 2024Q2 performance maintained a relatively rapid year-on-year growth trend. Juxin Technology's 2024H1 revenue was about 0.28 billion yuan, YoY +28%; gross profit margin was 46.5%, YoY+5.2 pcts; net profit to mother was about 0.041 billion yuan, YoY +66%.

Juxin Technology's 2024Q2 revenue is about 0.162 billion yuan, QoQ +37%, YoY +18%; gross margin is about 47.2%, QoQ +1.8pcts, YoY+5.8pcts; net profit to mother is about 0.032 billion yuan, QoQ +280%, YoY +94%.

The revenue of the three major businesses of Juxin Technology's 2024H1 continued to grow year over year. Looking at the division business, Juxin Technology's 2024H1 Bluetooth audio SoC business revenue is about 0.207 billion yuan, YoY +28%, and gross margin is about 47.6%, up 4.8pcts compared with 2023; portable audio and video SoC business revenue is about 0.042 billion yuan, YoY +8%, gross margin about 48.6%, down 1.9 pcts compared to 2023; end-side AI processor business revenue is about 0.031 billion yuan, YoY+71 %, gross margin of about 35.6%. The year-on-year increase in gross margin of Juxin Technology's 2024H1 means that the company continues to optimize its product structure and increase its share of sales of high-margin products.

Bluetooth audio SoCs break through international first-tier brands, and end-side AI processors continue to expand. According to Juxin Technology's 2024 semi-annual report: 1) In terms of Bluetooth audio SoC, the company's high-end Bluetooth speaker SoC has achieved breakthroughs in international first-tier brands. Low-latency, high-sound quality wireless audio SoCs continue to expand in incremental markets such as wireless home theater audio systems, wireless microphones, wireless gaming headsets, and wireless transceiver dongles. Smart Bluetooth wearable SoC has been iteratively upgraded and used in Xiaomi, Honor, Noise, Fire-Bolt, TITAN, Realme, Nothing, BOAT, INMO, etc. In products such as watches, bracelets, AR glasses, etc.; 2) In terms of end-side AI processors, the company's end-side AI processors have been shipped on a large scale and continue to be sold by international first-tier audio brand customers. The ATS361X next-generation dedicated audio DSP processor chip has been used by international first-tier audio customers and is expected to be mass-produced one after another in the second half of 2024.

valuations

Because the gross margin of Juxin Technology's 2024H1 Bluetooth audio SoC exceeded our original expectations, and the revenue of the end-side AI processor exceeded our original expectations, we raised Juxin's 2024/2025/2026 EPS estimate to 0.66/0.82/0.99 yuan.

As of the close of August 30, 2024, the company's total market value was about 3.3 billion yuan, corresponding to 2024/2025/2026 PE 33.7/27.1/22.6 times, respectively. Maintain an increase in holdings rating.

The main risks faced by ratings

Market demand fell short of expectations. Downstream penetration falls short of expectations. Product iterations are falling short of expectations. The competitive landscape in the market deteriorated.