On the evening of October 29, Victory Giant Technology (Huizhou) Co., Ltd. (ASX: 300476) released its 2026 third-quarter report. At first glance, the financials did not look bad: revenue for the first three quarters reached 18.461 billion yuan, up 30.77% year-on-year; non-GAAP net profit was 3.694 billion yuan, up 13.74% year-on-year. Against the backdrop of continuously expanding AI computing power demand, Victory Giant Technology, as a core PCB supplier, appeared to still be extending its growth narrative.
But the market gave the opposite answer. On October 29, Victory Giant Technology shares closed down 11.05%, with net outflows from main funds exceeding 1 billion yuan in a single day; after the open on October 30, the stock continued to plunge, with intraday losses at one point exceeding 12%. Behind the capital voting with its feet is a set of harsh realities in the third-quarter report masked by the non-GAAP figures. The halving of net profit attributable to shareholders is the most glaring crack in this report.
In the third quarter, Victory Giant Technology's net profit attributable to shareholders was only 527 million yuan, a sharp year-on-year drop of 52.17%, and a 66% plunge from 1.568 billion yuan in the second quarter. Revenue was growing, and core non-GAAP profit was also growing, yet attributable profit nearly fell off a cliff — the difference came from non-recurring gains and losses. In the third quarter alone, non-recurring gains and losses totaled -749 million yuan, of which losses from fair value changes in financial assets reached as high as 690 million yuan. The company admitted that these losses stemmed from investment paper losses in certain IPO projects of industry chain partners in which it participated. For a hard-tech company with high-end PCB manufacturing as its core business, having its income statement swing violently due to secondary-market stock trading paper losses is itself a signal worth watching.
Deeper concerns are hidden in the balance sheet. As of the end of the third quarter, Victory Giant Technology's inventory soared from 3.162 billion yuan at the beginning of the year to 9.249 billion yuan, an increase of 192.49%. The company explained that the growth mainly came from raw material lock-in stocking based on orders in hand, as well as an increase in work-in-progress. Logically, this can be self-consistent: AI high-end PCB products are becoming more complex and production cycles are lengthening, so advance stocking is a guarantee of delivery capability. But the 192% inventory growth rate far exceeds the 30.77% revenue growth rate over the same period. What does the huge gap between the two mean? If downstream demand materializes as scheduled, this is foresight; if customer order pacing changes, or if validation progress for a new generation of products falls short of expectations, this 9.2 billion yuan of inventory will quickly turn from a strategic reserve into an impairment bomb. Accounts receivable also grew 40.38% in tandem to 8.242 billion yuan, similarly suggesting that the quality of revenue needs a question mark. Order visibility has been repeatedly emphasized, but certainty itself is being tested.
Victory Giant Technology said in its earnings communication that current orders in hand are full, some customers have already released long-term demand for 2027 to 2028, and order visibility is at a historical high. However, the market's pricing of this certainty is changing. Since hitting a historical high of 402.6 yuan per share in May, Victory Giant Technology's stock price has retraced more than 60%. When a company's apparent profit can easily have half wiped out by a single investment paper loss, and when inventory is expanding at several times the rate of revenue growth, investors have reason to ask: are those repeatedly promised future orders enough to digest the current aggressive stocking pace? If delivery and revenue recognition in Q4 are slightly delayed, the squeeze from 9.2 billion yuan of inventory on cash flow and profit will be far more lasting than a single paper loss. Victory Giant Technology's core business has not collapsed, non-GAAP profit is still growing, and the demand logic for AI computing power PCBs has not been disproven. But what the third-quarter report reveals is a company whose balance sheet is expanding rapidly amid high-speed expansion, while its income statement is increasingly disturbed by non-operating factors. As the gap between paper profit and real operations widens, it is not surprising that the market chooses to leave the field and wait and see.
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