Optical module business grows strongly, Dongshan Precision's Q3 net profit attributable to parent up 401% to 2.332 billion yuan

The explosive growth of the optical module business drove a qualitative leap in Dongshan Precision's performance, with the company's net profit in the third quarter alone increasing more than fourfold year-on-year, while net profit for the first three quarters also rose more than threefold compared with the same period last year. At the same time, the company completed the listing of its H shares in Hong Kong during the reporting period, further accelerating the pace of its capital operations.

Dongshan Precision announced that its operating revenue in the third quarter of 2026 was 17.582 billion yuan, up 73.81% year-on-year; net profit attributable to shareholders of the listed company was 2.332 billion yuan, up 401.18% year-on-year; and net profit after deducting non-recurring gains and losses was 2.099 billion yuan, up 406.69% year-on-year. Measured on a quarter-on-quarter basis, third-quarter operating revenue rose 19.93%, net profit attributable to shareholders rose 26.26%, and net profit after deducting non-recurring gains and losses rose 47.82%.

For the first three quarters of 2026, operating revenue was 45.379 billion yuan, up 67.63% year-on-year; net profit attributable to shareholders of the listed company was 5.289 billion yuan, up 332.34% year-on-year; and net profit after deducting non-recurring gains and losses was 4.579 billion yuan, up 327.48% year-on-year.

The strong growth in performance was mainly driven by the newly added optical module business after Source Photonics was included in the consolidation scope, combined with steady improvement in the company's traditional business segments. During the reporting period, gains from changes in fair value reached 778 million yuan, a substantial increase from the same period last year, also making a certain positive contribution to net profit. At the same time, financial expenses surged more than tenfold year-on-year to 824 million yuan, and the rapid rise in financing costs has become a potential pressure that cannot be ignored beneath the performance growth.

Dual drivers of optical modules and AI PCB, rapid expansion of revenue scale

The substantial jump in Dongshan Precision's revenue this period was driven at its core by the explosive growth of the optical module business. In explaining the reasons for changes in financial data, the company clearly stated that the reporting period included additional data from Source Photonics and GMD Group being included in the consolidation scope compared with the prior year, the optical module business achieved explosive growth, and at the same time the company maintained stable growth in its traditional businesses.

Total operating revenue for the first three quarters reached 45.379 billion yuan, an increase of approximately 18.3 billion yuan from 27.071 billion yuan in the same period last year. At the same time, operating costs were 35.721 billion yuan, up 53.06% year-on-year, with revenue growth clearly outpacing cost growth, driving significant improvement in overall profitability.

R&D investment was also increased accordingly. R&D expenses for the first three quarters reached 1.365 billion yuan, up 47.05% year-on-year. The company said it will continue to increase R&D efforts around next-generation high-speed optical chips, optical modules and AI PCB. The period-end balance of construction in progress increased 133.04% from the beginning of the year to 5.467 billion yuan, and other non-current assets rose 85.46%, both pointing to continued large-scale capital investment in optical module and AI PCB capacity expansion projects.

M&A expansion pushes up financing scale, tenfold increase in financial expenses draws attention

Along with strategic acquisitions and capacity expansion, Dongshan Precision's debt scale also expanded rapidly in tandem, and financial cost pressure rose significantly.

Financial expenses for the first three quarters reached 824 million yuan, up more than 1,034% year-on-year. The company explained that this was mainly due to the strategic acquisitions of Source Photonics and GMD Group and active capacity expansion in the optical module and AI PCB product areas, which expanded the financing scale and increased financial interest expenses, while exchange rate changes this period also increased exchange losses.

On the balance sheet side, as of the end of September 2026, short-term borrowings increased 44.92% from the beginning of the year to 11.610 billion yuan, long-term borrowings rose 71.09% to 10.907 billion yuan, and accounts payable rose 31.66% to 17.173 billion yuan. Total assets increased 25.62% from the beginning of the year to 75.686 billion yuan, and total liabilities were 49.227 billion yuan, an increase of about 10.7 billion yuan from 38.549 billion yuan at the beginning of the year.

As for inventory, the period-end balance reached 12.367 billion yuan, up 38.50% from the beginning of the year, mainly due to increased stockpiling as a result of Source Photonics' sales growth. In addition, exchange rate fluctuations also had a clear impact on the statements. The period-end balance of other comprehensive income turned to -688 million yuan, further deteriorating from -241 million yuan at the beginning of the year, mainly due to changes in the translation difference of foreign currency statements.

H shares successfully listed on HKEX, broadening financing channels

During the reporting period, Dongshan Precision completed the listing of its H shares in Hong Kong, opening a new overseas financing channel for the company.

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Prior to that, the company had obtained a filing notice for overseas offering and listing issued by the China Securities Regulatory Commission in September 2026, and passed the hearing of the Listing Committee of the Stock Exchange of Hong Kong on October 8. The H-share listing will help the company further broaden financing channels while accelerating expansion of its optical module and AI PCB businesses, alleviating the funding pressure brought by continuously rising capital expenditures.

Cash flow remains positive, operating stability provides support

Despite large-scale cash outflows from investing and financing activities, the company's operating cash flow remained positive, providing some fundamental support.

Net cash flow from operating activities for the first three quarters was 3.515 billion yuan, up 19.32% year-on-year, indicating that the cash-generating capacity of the core business remained sound. The period-end balance of cash and cash equivalents was 6.325 billion yuan, a slight increase from 6.105 billion yuan at the beginning of the period. The company said this was due to proactively strengthening cash reserves to cope with expanded working capital needs.

On the investing side, capital expenditures expanded substantially in the first three quarters. Expenditure on the purchase and construction of fixed assets, intangible assets and other long-term assets alone was 8.818 billion yuan, more than 1.6 times the 3.378 billion yuan in the same period last year, and net cash outflow from investing activities reached 9.084 billion yuan. Net cash inflow from financing activities was 6.061 billion yuan, providing part of the funding source for investment expenditure. Overall, the company is currently in a period of rapid expansion, and the scale of capital expenditure and financing needs will remain high for a considerable period of time. Risk disclosure and disclaimer

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