In the first three quarters of 2026, JCET Group Co.,Ltd. (600584.SH) reported a net profit excluding non-recurring gains and losses of 1.56 billion yuan, up 99.17% year-on-year, nearly doubling. Yet the balance sheet in the same third-quarter report tells a different story: cash on hand fell from 5.57 billion yuan at the start of the year to 5.06 billion yuan, a decrease of 510 million yuan. Including 3.2 billion yuan in wealth management products (trading financial assets) at the beginning of the year, the readily available funds on the books shrank from 8.78 billion yuan to 5.36 billion yuan, a drop of 3.4 billion yuan.
Despite earning so much, the company has less cash on hand. This is not contradictory—the money has not vanished, it is simply no longer on the books. Over the same period, JCET Group Co.,Ltd. spent 8.89 billion yuan in cash on fixed assets and other long-term assets, more than double the figure from the same period last year. This article aims to clarify three things: where the profit comes from, where the money went, and who ultimately pays the bill.
The Profit Is Real
Let us first run the most basic test: can this profit withstand scrutiny? The first layer is quality. Net profit attributable to shareholders was 1.617 billion yuan, and after deducting non-recurring items it was 1.561 billion yuan, with total non-recurring gains and losses of only 56 million yuan—meaning recurring profit accounted for 96.5% of attributable net profit. Back-calculating from the year-on-year growth rate, this ratio was about 82% in the same period last year, meaning nearly 20% of last year's profit came from one-off items, while this year it has fallen to less than 4%. This also explains why the recurring profit growth rate (99%) is far higher than the attributable net profit growth rate (70%).
▲Source: Company financial report
The second layer is cash. Cash received from sales of goods was 30.92 billion yuan, nearly matching the 30.95 billion yuan in revenue; accounts receivable stood at 6.25 billion yuan, up only 2.9% from the start of the year; operating cash flow was 4.30 billion yuan, about 2.7 times the attributable net profit. Revenue was not built on credit sales.
The third layer is source. Computing electronics accounted for 30.9% of revenue, up 54% year-on-year; automotive electronics accounted for 11.3%, up 30%. Roughly calculated by share, computing electronics contributed about 9.56 billion yuan, an increase of about 3.35 billion yuan over last year, exceeding the company's total revenue increase of 2.28 billion yuan. The combined increase from these two businesses was about 4.16 billion yuan, implying that the remaining businesses collectively shrank by nearly 1.9 billion yuan. Growth is highly concentrated, a point we will return to later.
On the profit margin side, the company disclosed a 2.3 percentage point year-on-year increase in gross margin. Calculating from the income statement, this year it was 16.0% and last year 13.7%, which matches. Operating costs rose 5.1% while revenue rose 8.0%—the difference is profit.
One more point to add: income tax expense fell from 230 million yuan to 149 million yuan, with the effective tax rate dropping from 19.5% to 8.6%. Of the 640 million yuan increase in net profit, about 190 million yuan came from paying less tax. This does not change the judgment that profits are real, but it explains why net profit (including minority interests) growth (67%) was higher than total profit growth (47%).
Where the Money Went
Cash paid for fixed assets, intangible assets and other long-term assets was 8.89 billion yuan in the first three quarters, versus 4.36 billion yuan in the same period last year, a 104% increase—5.5 times the attributable net profit for the same period. The balance sheet confirms the destination: construction in progress rose from 3.89 billion yuan to 6.94 billion yuan, an increase of 3.05 billion yuan; fixed assets rose from 23.51 billion yuan to 26.74 billion yuan, an increase of 3.23 billion yuan. Together these two items increased by 6.28 billion yuan, equivalent to 93% of the total asset increase (6.73 billion yuan).
Construction in progress has not yet been converted to fixed assets, so this investment has not begun contributing revenue. Current profits come from old capacity running at high utilization rates, while the bill for the new factory buildings is still to come.
The money not yet spent is even larger. On June 24, the board approved the construction of a high-end advanced packaging and testing plant in the Wanxiang Industrial Park of the "Oriental Chip Port" in Shanghai Lingang, with a total project investment of 7.8 billion yuan. As of the report disclosure date, the company had only completed the registration of a wholly owned subsidiary, which has not yet appeared in the financial statements.
On September 3, the board also approved a plan to issue A-shares to specific targets: no more than 35 targets, raising no more than 6.5 billion yuan, with no more than 128 million shares issued, about 7.1% of existing total share capital. Controlling shareholder Panshi Runqi is also among the subscription targets. The plan has received preliminary approval from the state-owned asset approval authority but still needs to pass three hurdles: the shareholders' meeting, the Shanghai Stock Exchange, and the China Securities Regulatory Commission.
▲Source: Company website
The fundraising purposes include advanced packaging capacity expansion for high-performance computing, upgrade of high-end power module packaging and testing, wafer-level packaging upgrade, system-level packaging and testing upgrade for memory chips, as well as supplementing working capital and repaying bank loans. Putting the 7.8 billion yuan new plant together with the 6.5 billion yuan fundraising, the nominal plan is 14.3 billion yuan, about 3.3 times this year's first three quarters operating cash flow. The two figures are on different bases—part of the private placement is for working capital and loan repayment, and factory investment is also spread over years—so they cannot simply be added together. But the direction is clear: profits, cash, and future equity are all being pressed into capacity.
Who Pays the Bill
The 8.89 billion yuan in spending was cobbled together from three pockets. The first is operating cash flow of 4.30 billion yuan, covering only 48% of capital expenditure. The second is wealth management products: 6.60 billion yuan recovered, 3.71 billion yuan newly invested, net recovery of 2.89 billion yuan—most of the 3.2 billion yuan in wealth management products at the start of the year flowed to the construction site. The third is borrowing: 10.77 billion yuan borrowed, 8.74 billion yuan repaid, net borrowing of 2.03 billion yuan. Together the three total about 9.2 billion yuan, just covering capital expenditure. After deducting 250 million yuan for subsidiary acquisitions, 440 million yuan for interest and dividends, and exchange rate effects, cash fell by a net 510 million yuan.
The borrowed money is also changing in structure. Short-term borrowings stood at 3.23 billion yuan, 3.1 times the start of the year; bonds payable were 4.80 billion yuan, double the 2.40 billion yuan at the start of the year. To be fair, non-current liabilities due within one year decreased by 1.85 billion yuan over the same period, so part of the short-term borrowing is refinancing of old debt. Total interest-bearing liabilities (short-term borrowings, debt due within one year, long-term borrowings, and bonds) rose only from 11.89 billion yuan to 13.76 billion yuan, an increase of 1.87 billion yuan. But after subtracting cash and wealth management products, net debt rose from about 3.1 billion yuan to about 8.4 billion yuan, and the debt-to-asset ratio rose from 43.6% to 48.4%.
Exchange rates are another invisible bill. The foreign currency translation difference was -539 million yuan, and total other comprehensive income was -512 million yuan, equivalent to 32% of attributable net profit. This does not flow into the income statement, but directly reduces net assets: despite earning 1.62 billion yuan, attributable equity increased by only 860 million yuan, a rise of 3.01%. Interest expense fell 17.5% year-on-year, but financial expenses rose 23.6% to 355 million yuan—items other than interest (not broken down in the report, usually including exchange gains and losses) are also eating into profits.
Finally, inventory. Inventory stood at 6.16 billion yuan, up 61.6% from the start of the year, while first three quarters revenue grew only 8% year-on-year. Accounts payable rose 43% in tandem to 10.62 billion yuan, with suppliers sharing some of the pressure—how much of this is equipment payments was not disclosed in the report. Asset impairment losses rose 65% year-on-year to 89 million yuan, which is also worth noting.
Conclusion
The company's explanation for growth is concise: rapid growth in AI-related infrastructure and edge demand, a clear trend of domestic substitution, and high capacity utilization. This is the current order book. But the 6.9 billion yuan in construction in progress, the 7.8 billion yuan in Lingang, and the 6.5 billion yuan awaiting approval correspond to capacity not yet in production. As calculated earlier, growth is concentrated in one line—computing electronics—while other businesses are contracting overall. Inventory and liabilities are already elevated, and exchange rates continue to erode net assets. Extrapolating today's order curve to the day the new factory buildings start production is the implicit premise of this investment. The accounts are clear, but the answer is not in the accounts.
(This article is personal analysis only and does not constitute any investment advice. Investing carries risks; enter the market with caution.)
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