Huagong Technology 2025 Annual Report Analysis: Revenue Increased by 22.59%, Net Operating Cash Flow Grew by 66.83%

Core Profitability Metrics Interpretation

Operating Revenue: Significant Scale Expansion, Bright Growth in Overseas Business

In 2025, Huagong Technology achieved operating revenue of 14.36B yuan, a year-on-year increase of 22.59%, setting a new record high. By business segment, optoelectronic device series products generated 6.1B yuan, a 53.39% increase year-on-year, becoming the core growth engine; laser processing equipment and intelligent manufacturing lines, sensitive components, and laser holographic films achieved revenues of 3.64B yuan, 4.03B yuan, and 464 million yuan respectively, with growth rates of 4.13%, 9.78%, and 8.61%.

Regionally, domestic revenue was 12.35B yuan, up 19.53% year-on-year; overseas revenue reached 2.01B yuan, a substantial increase of 45.52%, with notable success in expanding overseas markets, becoming a new growth driver.

Net Profit: Steady Growth, Better Non-Recurring Item Performance

Net profit attributable to shareholders of the listed company was 1.47B yuan, up 20.48% year-on-year; net profit excluding non-recurring gains and losses was 1.19B yuan, an increase of 32.32%. The growth rate of non-recurring net profit significantly outpaced that of net profit, indicating improved profitability quality of core business and a weakening impact of non-recurring items on net profit.

Earnings Per Share: Growth Synchronizes with Profitability

Basic earnings per share were 1.47 yuan/share, up 21.49% year-on-year; non-recurring EPS was 1.18 yuan/share, an increase of 32.32%. The growth pace aligns with net profit and non-recurring net profit, reflecting a simultaneous increase in shareholder returns per share.

Cost Structure Analysis

Total Expenses: R&D Investment Maintains Strength, Management Expenses Grow Significantly

In 2025, total expenses (sales + management + R&D + financial) amounted to 1.8B yuan, a 5.06% increase. Specifically:

• Sales Expenses: 560 million yuan, up 3.71%, relatively stable growth aligned with revenue scale.
• Management Expenses: 373 million yuan, up 39.35%, mainly due to the reclassification of special bonuses from 2021-2023 previously included under management expenses to corresponding cost items, along with corporate governance optimization and business expansion increasing management costs.
• R&D Expenses: 885 million yuan, up 0.80%, maintaining stable R&D investment with ongoing focus on technological innovation.
• Financial Expenses: -17 million yuan, a significant increase of 79.34%, mainly due to reduced interest income, which was 116 million yuan this period compared to 157 million yuan last year.

R&D Investment: Increased Capitalization Rate, Smooth Progress of Key Projects

In 2025, total R&D investment was 1.09B yuan, up 9.96%, accounting for 7.60% of operating revenue. Of this, capitalized R&D amounted to 207 million yuan, with a capitalization rate of 18.96%, up 7.36 percentage points from last year, as some R&D projects entered the results transformation stage.

Major R&D projects include the efficient and precise processing equipment for large structural parts of engineering machinery, which is continuously optimized and produced in small batches; new-generation intelligent 3D five-axis laser cutting machines and six-axis laser micro-hole processing machines are under testing and improvement; projects like 800G LPO optical modules and whole-house optical fiber seamless roaming networking products are progressing smoothly, with some already generating sales revenue.

R&D Personnel: Team Size Expands, Structure Continues Optimization

In 2025, R&D personnel numbered 2,698, an increase of 8.66%; R&D staff accounted for 28.51%, up 0.37 percentage points from last year. Regarding educational background, there are 1,619 R&D personnel with higher education, up 8.44%; 790 hold master’s degrees, up 11.58%. The faster growth of high-education R&D staff indicates ongoing enhancement of team professionalism. Age-wise, 1,160 R&D personnel are aged 30-40, up 10.27%, forming the core R&D force.

Cash Flow Analysis

Operating Cash Flow: Significant Increase, Enhanced Cash Generation Ability

Net cash flow from operating activities was 1.22B yuan, up 66.83%, mainly due to increased cash received from sales of goods and services. Operating cash inflow was 13.23B yuan, up 26.51%; outflow was 12.01B yuan, up 23.48%. The faster growth of inflow compared to outflow drove the substantial increase in net cash flow.

Investing Cash Flow: Narrowed Net Outflow, Still Negative

Net cash flow from investing activities was -1.09B yuan, slightly narrower than last year’s -1.12B yuan. Cash inflow from investing activities was 1.06B yuan, down 15.81%; outflow was 2.4B yuan, down 9.54%. This was mainly due to reduced cash received from investment recoveries and investment income, as well as lower cash payments for fixed assets, intangible assets, and other long-term assets.

Financing Cash Flow: Shift from Net Inflow to Outflow, Increased Debt Repayment and Share Repurchases

Net cash flow from financing activities was -176 million yuan, compared to 554 million yuan last year, shifting from net inflow to outflow. Cash inflow from financing was 2.57B yuan, up 114.56%, mainly due to increased borrowings and other financing-related cash receipts; outflow was 2.27M yuan, a sharp increase of 356.33%, mainly due to higher debt repayments and the company’s repurchase of 9.8 million shares using special loans, leading to a significant rise in financing cash outflows.

Risk Factors Reminder

International Trade and Geopolitical Risks

The company’s overseas sales continue to grow. Global geopolitical uncertainties, trade policy changes, import-export controls, and other factors may impact international operations. Tensions in US-China trade relations leading to tariff policy adjustments and export restrictions could increase product costs and affect supply chain stability.

Industry Competition and Technological Iteration Risks

The optical communication, sensor, and laser equipment industries are highly competitive with rapid technological updates. Failure to keep pace with technological development or adapt to customer needs may result in decreased product competitiveness and loss of market share.

Supply Chain and Capacity Management Risks

Production relies on stable supply of key raw materials and components, which may face shortages, price fluctuations, or delivery delays. Capacity expansion depends on funding, equipment, and talent; if unable to meet customer demands or maintain high yield and utilization, delivery capability, customer relationships, and profitability could be affected.

Overseas Operations and Compliance Risks

Overseas business faces different legal, regulatory, tax, and labor policies. Failure to adapt or comply may lead to penalties, lawsuits, or reputational damage. Currency fluctuations could also impact foreign currency revenues and costs.

Senior Management Compensation

Chairman and General Manager Ma Xinqiang received a pre-tax remuneration of 3.2184 million yuan during the reporting period;
Director, Vice President, and Board Secretary Liu Hanshu received 2.3172 million yuan;
Director and Vice President Xiong Wen received 2.269 million yuan;
Vice President Zhang Qin received 2.3655 million yuan;
Vice President and CFO Wang Xia received 2.4138 million yuan.

Overall, Huagong Technology’s 2025 revenue and profits grew steadily, operating cash flow improved significantly, and R&D investment continued. However, risks from international trade and industry competition remain. Investors should pay attention to technological iteration and overseas business developments.

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