Hygon Information Technology Co., Ltd., a leading domestic computing chip manufacturer, delivered an impressive financial report for the first quarter of 2026. During the reporting period, the company achieved operating revenue of 4.034 billion yuan, a substantial year-on-year increase of 68.06%, setting a new historical high for single-quarter revenue. Net profit attributable to shareholders of the listed company reached 687 million yuan, up 35.82% year-on-year, with basic earnings per share rising to 0.30 yuan. Against the backdrop of accelerating infrastructure construction for domestic AI computing power, Hygon is advancing in both the general computing and artificial intelligence computing markets with its high-performance, high-reliability, and low-power product portfolio, with its performance realization speed exceeding market expectations.
Notably, if the accounting impact of share-based payments is excluded, the company's net profit attributable to shareholders would have been as high as 923 million yuan, representing a significant year-on-year growth of 74.86%. Furthermore, the adjusted net profit after non-recurring items reached 833 million yuan, an increase of 79.44% year-on-year. However, the same financial report also highlighted a notable discrepancy: net cash flow from operating activities for the quarter was only 67.62 million yuan, a sharp decrease of 97.32% compared to 2.522 billion yuan in the same period last year. While this figure appears concerning at first glance, a deeper analysis reveals the primary reasons were the company's proactive increase in material inventory reserves, significant inventory expansion, and the high base effect from receiving substantial customer contract prepayments in the prior year period. This is not indicative of a deterioration in operational quality.
Behind the Revenue Surge: Subtle Pressure on Gross Margin While revenue grew by nearly seventy percent, the profit growth rate was noticeably slower than the revenue growth rate, reflecting subtle changes in the profit margin structure. A breakdown of the income statement shows that the quarter's operating cost was 1.791 billion yuan, resulting in a gross profit of approximately 2.243 billion yuan and a gross margin of about 55.6%. This compares to a gross margin of approximately 61.2% in the same period last year, representing a decline of nearly 6 percentage points. The narrowing gross margin partly reflects dynamic adjustments in the company's product mix—as shipments of AI computing products rapidly scale up, the proportion of products with stronger hardware attributes and relatively higher cost components may have increased. Additionally, the rapid expansion of sales expenses significantly impacted the net profit margin. Sales expenses for the quarter reached 180 million yuan, a year-on-year surge of 176%, far exceeding the revenue growth rate, indicating the company is ramping up front-end investment in market development and customer service to capture opportunities during the AI computing penetration window. General and administrative expenses saw a slight decrease year-on-year, suggesting stable internal operational control. Overall, the operating profit margin for the quarter was approximately 24.1%, down from 30.4% in the same period last year, directly related to the dual expansion of R&D and sales expenses. During a phase of rapid revenue growth, accepting short-term margin pressure in exchange for long-term market positioning is a common strategy for technology companies, and Hygon is no exception.
R&D Investment Exceeds 12 Billion: Share-Based Payments a Key Variable Total R&D investment for the quarter reached 1.211 billion yuan, a year-on-year increase of 58.61%. Of this amount, 1.149 billion yuan was recognized as "R&D expenses" on the income statement, accounting for a significant 28.5% of revenue, while the remaining approximately 62 million yuan was capitalized (recorded under the development expenditure item on the balance sheet). The company directly attributed the substantial growth in R&D investment to a significant year-on-year increase in the number of R&D personnel, leading to a sharp rise in personnel costs and share-based payments. Share-based payments are a key variable for understanding Hygon's profit quality—this is a non-cash expense that recognizes employee incentive costs as option amortization on the income statement, which depresses reported net profit but does not affect the company's actual cash generation capability. After excluding the impact of share-based payments, the growth rates for net profit attributable to shareholders and adjusted net profit attributable to shareholders were 74.86% and 79.44% respectively, far exceeding the growth rates calculated including share-based payments. This indicates that as the company's revenue scale continues to expand, operating leverage effects are gradually materializing. If the peak period for share-based payments passes in the future, the potential for reported net profit growth could be considerable.
Cash Flow: Dual Impact of Inventory Expansion and High Base Period The sharp decline in net operating cash flow from 2.5 billion yuan to 67.62 million yuan is the most noteworthy data point in this report requiring in-depth interpretation. A detailed look at the cash flow statement shows that cash received from selling goods this quarter was 4.304 billion yuan (lower than the period's revenue, indicating an expansion of accounts receivable), while cash paid for goods purchased was 3.417 billion yuan, nearly doubling year-on-year. This directly reflects the company's strategic intent to build up inventory proactively. The balance sheet shows that as of the end of March, inventory had ballooned to 7.333 billion yuan from 6.406 billion yuan at the beginning of the year, an increase of over 900 million yuan in a single quarter. Prepayments also expanded from 2.885 billion yuan to 3.440 billion yuan. Simultaneously, contract liabilities (i.e., customer prepayments) decreased from 2.019 billion yuan at the start of the year to 1.510 billion yuan. This, combined with the high base effect from receiving substantial contract prepayments in the same period last year, collectively contributed to the significant contraction in operating cash flow for this period. This phenomenon typically occurs at cyclical junctures characterized by strong demand and proactive supply chain preparation, and is not a sign of operational deterioration. On the contrary, large-scale inventory buildup itself is strong evidence of the company's optimistic expectations for future order fulfillment. Regarding investing activities, the quarter saw a net inflow of 191 million yuan, a stark contrast to the net outflow of 4.039 billion yuan in the same period last year due to large-scale financial investments. For financing activities, the company had a net repayment of borrowings of approximately 700 million yuan, coupled with dividend and interest payments exceeding 200 million yuan, resulting in a net outflow of 929 million yuan from financing activities, indicating a steady decline in financial leverage.
Balance Sheet: Ample Resources, Robust Financial Structure As of March 31, 2026, the company's total assets stood at 35.185 billion yuan, a slight decrease of 1.27% from the beginning of the year. Monetary funds amounted to 7.852 billion yuan, and combined with cash and cash equivalents of 6.722 billion yuan at period-end, overall liquidity remains ample. Net assets attributable to shareholders reached 23.497 billion yuan, an increase of 4.46% from the start of the year. The weighted average return on equity was 2.99%, up 0.52 percentage points from the same period last year. On the liabilities side, the company reduced its short-term borrowings from 3.450 billion yuan at the beginning of the year to 2.950 billion yuan, and long-term borrowings decreased from 500 million yuan to 200 million yuan. The total scale of interest-bearing debt decreased from approximately 3.95 billion yuan at the start of the year to approximately 3.15 billion yuan, showing a clear deleveraging trend. With net interest expense being only approximately -35.76 million yuan (interest income of 53.99 million yuan versus interest expense of 18.16 million yuan), the company's substantial cash pool continues to generate significant interest income, resulting in a negative net finance cost that contributes positively to profits. In terms of shareholder structure, the major shareholder landscape remains stable. Dawning Information Industry Co., Ltd. holds 27.96% as the largest shareholder, followed by Tianjin Haifu Tianding with 10.81%. Shareholders with state-capital backgrounds, including Chengdu Industrial Investment Group, Chengdu Lanhai Qingzhou, and Chengdu Hi-Tech Investment Group, collectively hold over 23% of the shares, underscoring the company's clear state-backed background, strategic positioning, and stable ownership structure.
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