SGX questions Hengxin Technology’s spending spree

The manufacturing company’s expenses increased by about 43% in 3Q11, and SGX demands an explanation.

According to a release, Hengxin Technology refers to the following query on 15 November 2011 from SGX-ST regarding announcement of the unaudited results for the third quarter and nine months ended 30 September 2011:

Query 1

We note that research and development expenses have increased by about 43% and 27% in the third quarter of 2011 and the nine months ended 30 September 2011 respectively. Please provide the nature of these expenses.

Response:
Higher R&D expenses were incurred on the research and development of our existing products in preparation for the shift in mobile communication network to the fourth generation (4G), as well as on improvement of the technical specifications of our products as required by our customers. With changes in technology and different customers using different equipment, the Company has engaged in more research and development
activities to keep abreast with the technological changes in order to meet with its customers’ requirements, both locally and overseas as the Company ventures into different markets.