The rapid expansion of the artificial intelligence industry is profoundly reshaping the landscape of the domestic high-end chip market, with Hygon Information Technology Co.,Ltd. (SSE: 688041) maintaining strong momentum in earnings growth.
Hygon Information Technology Co.,Ltd. released its third-quarter report on October 20, 2026. For the first three quarters, operating revenue reached 14.955 billion yuan, up 57.58% year-on-year; net profit attributable to shareholders of the listed company was 2.847 billion yuan, up 45.12% year-on-year.
On a single-quarter basis, third-quarter 2026 revenue was 5.856 billion yuan, up 45.46% year-on-year; net profit was 1.048 billion yuan, up 37.90% year-on-year. The company attributed its earnings growth to the rapid development of the artificial intelligence industry and the full transition of the domestic substitution process from policy-driven to market-driven, with demand for high-end domestic chips continuing to climb.
Notably, after excluding the impact of share-based payment, net profit attributable to shareholders of the listed company for the first three quarters reached 3.586 billion yuan, a year-on-year increase of 76.90%, far exceeding the 45.12% under the accounting basis, indicating that the improvement in the company's core operating profitability was even more significant.
Revenue and Profit Both Accelerate as R&D Investment Ramps Up
Hygon Information Technology Co.,Ltd. reported operating revenue of 14.955 billion yuan for the first three quarters, an increase of approximately 5.439 billion yuan from the same period last year, representing 57.58% growth. Operating costs were 6.492 billion yuan, with gross profit space expanding in tandem.
On the profit side, net profit for the first three quarters was 2.847 billion yuan, while net profit after deducting non-recurring gains and losses was 2.584 billion yuan, up 42.25% year-on-year. Basic earnings per share were 1.23 yuan, up 44.71% year-on-year. The weighted average return on net assets was 11.59%, up 2.29 percentage points from the same period last year.
Among non-recurring gains and losses items, government subsidies made a prominent contribution, totaling approximately 269 million yuan for the first three quarters, which was the primary source of the approximately 262 million yuan gap between net profit and net profit after deducting non-recurring items for the period.
In terms of R&D investment, the company's cumulative R&D expenditure for the first three quarters was 4.472 billion yuan, up 52.39% year-on-year, accounting for 29.90% of operating revenue. Single-quarter R&D investment was 1.820 billion yuan, accounting for 31.08% of quarterly revenue, up 0.68 percentage points year-on-year. The company attributed the acceleration in R&D to three factors: continued investment in key core technology and forward-looking technology research, rapid expansion of R&D personnel, and increased share-based payment from the restricted stock incentive plan.
Heavy Stockpiling Inflates Current Assets as Operating Cash Flow Turns Negative
The balance sheet shows that as of September 30, 2026, the company's total assets were 40.688 billion yuan, up 14.17% from the end of 2025; owners' equity attributable to shareholders of the listed company was 26.423 billion yuan, up 17.47%.
In terms of current assets, prepayments surged from 2.885 billion yuan at the beginning of the year to 5.885 billion yuan, inventory rose from 6.406 billion yuan to 8.921 billion yuan, and accounts receivable also expanded from 4.034 billion yuan to 6.026 billion yuan. These three items together increased by approximately 8.487 billion yuan from the beginning of the year. The company explained that in order to match market sales plans, ensure supply capacity, and seize market opportunities, it increased stockpiling in line with its business strategy, with raw material procurement spending rising significantly year-on-year.
This strategy directly placed notable pressure on operating cash flow. Net cash flow from operating activities for the first three quarters was -2.443 billion yuan, compared with positive 2.255 billion yuan in the same period last year, a decline of 208.35%. Cash paid for goods purchased and services received surged from 6.439 billion yuan in the same period last year to 12.533 billion yuan, the main driver behind the negative cash flow.
At the same time, the company bridged the funding gap by increasing borrowing. Net cash inflow from financing activities for the first three quarters was 2.063 billion yuan, with short-term borrowings rising from 3.450 billion yuan at the beginning of the year to 4.036 billion yuan, and long-term borrowings increasing from 500 million yuan to 2.080 billion yuan.
AI and Domestic Substitution as Twin Drivers Strengthen Competitive Advantage
In its third-quarter report, the company explicitly attributed its earnings growth to two core drivers: first, the rapid development of the artificial intelligence industry driving continued growth in computing power demand; second, the domestic substitution process transitioning fully from policy-driven to market-driven, marking broader recognition of the market competitiveness of domestic high-end chips.
The company stated that it will continue to iteratively optimize product performance around the general computing and AI computing markets, maintaining its competitive advantage in the high-end chip market. The rapid expansion of R&D personnel and fast iteration of new products are viewed as core measures supporting the company's continued leadership.
In terms of shareholding structure, Dawning Information Industry Co., Ltd. holds 27.96% as the largest shareholder; Tianjin Haifu Tianding Technology Partnership holds 10.81%; Chengdu Industrial Investment Group and Chengdu High-Tech Investment Group hold 7.21% and 5.92% respectively, with state-owned background shareholders collectively holding a relatively high proportion of shares. Hong Kong Central Clearing Limited holds 2.54%, representing overseas investor holdings.
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