Optical module "hot stock" Huagong Technology's net profit in 2025 is nearly 1.5 billion yuan, still below institutional expectations, with gross profit margins of optoelectronic device series products increasing by nearly 5 percentage points

Financial Daily Reporter | Cai Ding Financial Daily Editor | Huang Sheng

The optical module “hot stock” Huagong Technology (SZ000988, stock price 115.74 yuan, market value 116.4 billion yuan) disclosed its 2025 annual report on the evening of March 25. The company achieved approximately 14.36B yuan in revenue in 2025, a year-on-year increase of 22.59%; net profit attributable to shareholders of the listed company was 1.471 billion yuan, up 20.48% year-on-year; non-recurring net profit was about 1.47B yuan, up 32.32%; basic earnings per share were 1.47 yuan, an increase of 21.49%. The company plans to distribute a cash dividend of 2.5 yuan (tax included) for every 10 shares based on approximately 996 million shares, totaling about 249 million yuan in cash dividends, with no bonus shares or capital reserve conversion.

Image source: Huagong Technology Annual Report

According to data compiled from Wind Financial Terminal, eight institutions’ consensus forecast for Huagong Technology’s net profit attributable to the parent in 2025 is about 1.19B yuan. Therefore, based on the disclosed data, its performance is below expectations.

Core optoelectronic devices achieve nearly 6.1 billion yuan in revenue, a 53.39% increase

From a vertical perspective, Huagong Technology’s 2025 revenue of 1.83B yuan and net profit of 14.36B yuan both set new records for a single year. However, quarterly analysis shows that in Q4 2025, the company achieved revenue of 3.317 billion yuan, a 2.7% decrease quarter-on-quarter; net profit attributable to the parent was 149 million yuan, down 63.55% quarter-on-quarter.

Image source: Huagong Technology Annual Report

In addition to performance growth, during the reporting period, net cash flow from operating activities reached 1.47B yuan, a 66.83% increase, indicating significant progress in sales collection and capital operation efficiency, and a more stable capital chain.

Looking at business segments, Huagong Technology’s optoelectronic devices (connection business) contributed prominently, achieving revenue of 3.32B yuan, a 53.39% increase, accounting for 42.48% of total revenue, making it the main engine of the company’s growth.

Image source: Huagong Technology Annual Report

The annual report states that Huagong Technology is deeply focused on global AI computing infrastructure construction, achieving large-scale delivery of 800G silicon photonic LPO series and 1.6T optical module products in the top tier worldwide, and debuting multiple cutting-edge optical engine products (such as 1.6T/3.2T). The company has successfully transformed from a traditional telecom optical module supplier into a core competitor in the global AI optical interconnection field.

Regionally, Huagong Technology achieved overseas revenue of 2 billion yuan in 2025, a significant increase of 45.52% year-on-year, accounting for 14% of total revenue. The company is shifting from “product going abroad” to “brand going abroad” and “capability going abroad.” Additionally, the company’s overseas production bases in Thailand, Vietnam, and other countries continue to expand global capacity deployment, further optimizing the global supply chain system.

Image source: Huagong Technology Annual Report

In R&D, the company’s investment reached 1.22B yuan in 2025, a 9.96% increase, accounting for 7.60% of revenue. The company has made multiple breakthroughs in basic and applied research, applying for 433 patents (including 220 invention patents).

Revenue and net profit attributable to the parent fall short of institutional expectations

Despite numerous achievements during the reporting period and a rise in A-share stock prices, a reporter from the Daily Economic News (hereinafter “Daily Econ News Reporter”) noticed that Huagong Technology’s performance last year did not meet institutional expectations.

According to data compiled from Wind Financial Terminal, eight institutions’ consensus forecasts for Huagong Technology’s 2025 revenue and net profit attributable to the parent are approximately 6.1B yuan and 1.09B yuan, respectively. Compared to the disclosed revenue of 16.43B yuan and net profit of 1.83B yuan, the actual figures are below expectations, falling short by 12.65% and 19.78%, respectively.

Image source: Wind

Although Huagong Technology maintained stable overall revenue and gross profit margin last year, product-wise, the gross profit margin of “laser processing equipment and intelligent manufacturing lines” decreased by 1.56 percentage points to 29.40%; “laser holographic film series products” declined by 2.52 percentage points to 31.08%; “sensitive components” margin fell by 1.24 percentage points to 24.46%. Only the optoelectronic device series saw a positive growth in gross profit margin during the period.

Image source: Huagong Technology Annual Report

The annual report also shows that as of the end of the reporting period, Huagong Technology’s inventory book value reached 14.36B yuan, a 36.63% increase from 1.47B yuan at the beginning of the year. The company explained that this was mainly to cope with increased order volume and some raw material supply fluctuations, leading to strategic stockpiling. Meanwhile, the inventory impairment provision at the end of the period was 176 million yuan (up from 126 million yuan at the start), indicating pressure in inventory management.

The Daily Econ News Reporter also noted that Huagong Technology’s net cash flow from financing activities in 2025 was -176 million yuan, compared to 554 million yuan in the same period last year. The company stated this was mainly due to increased loan repayments. Additionally, the company’s “non-current liabilities due within one year” reached 1.659 billion yuan, a significant increase of 46.7% from 3.58B yuan at the beginning of the period.

Although Huagong Technology is currently one of the focal optical module concept stocks in the A-share secondary market, the annual report also discloses related risks. The company explicitly lists “industry competition and technological iteration risks” as one of its core challenges: especially in optical communications, sensors, and laser equipment, competitors may possess more abundant resources and technological accumulation.

Cover image source: Daily Econ News Media Library