Optical module business doubles, Dongshan Precision's Q1 revenue up 53% year-on-year, net profit surges 143% | Earnings Report

Benefiting from the wave of AI data center construction, Dongshan Precision delivered a stellar first quarter report. In the first quarter of 2026, the company achieved operating revenue of 13.138 billion yuan, a year-on-year increase of 52.72%; net profit attributable to shareholders was 1.11 billion yuan, up 143.47% year-on-year. The core driving force comes from the explosive growth of the optical module business. The company pointed out in its financial report that the optical module business seized the industry explosion and urgent customer orders, achieving doubled revenue compared to the same period last year and making a "core contribution" to this quarter’s revenue and profit. Meanwhile, Source Photonics and GMD Group, which were acquired and integrated last year, have been formally included in the consolidated financial statements. Leveraging Dongshan Precision’s synergies in capital, talent, technology, and customers, performance has been further scaled up. Profit quality was also outstanding. Net profit excluding non-recurring items reached 1.059 billion yuan, up 166.99% year-on-year, exceeding the growth rate of net profit itself, demonstrating strong organic profit-generating ability in the main business. The weighted average return on net assets rose from 2.39% in the same period last year to 5.05%, and basic earnings per share increased from 0.27 yuan to 0.61 yuan, an increase of 125.93%. Behind the Doubling of Revenue: Dual Engines of Optical Modules + M&A This quarter's revenue jumped from 8.602 billion yuan in the same period last year to 13.138 billion yuan, an increase of about 4.5 billion yuan, mainly from two sources. First is the contribution from newly consolidated acquisitions. Source Photonics and GMD Group were included in the consolidated financial statements for the first time during this reporting period, directly boosting the revenue base. These two acquisitions, advanced by Dongshan Precision last year, are now entering the phase of yield realization, with Source Photonics achieving "substantial growth" in both revenue and profit backed by group resources. Second is organic high growth in the optical module business. Global investment in AI computing infrastructure continues to accelerate, with structural surges in demand for high-speed optical modules. Dongshan Precision has benefited from its early positioning, seeing optical module revenue double year-on-year. In its traditional businesses, printed circuit boards, precision components, and optoelectronic display modules maintained steady shipments, providing a solid foundation. Gross Margin Improved, Profit Soared, Expense Pressure: Financial Expenses Surge 35-fold Operating costs rose from 7.387 billion yuan to 10.598 billion yuan, a year-on-year increase of 43.48%, lower than the revenue growth rate of 52.72%, indicating improved gross margins and initial economies of scale. Operating profit reached 1.324 billion yuan, up 122.62% year-on-year. There are several expense pressures worth noting. Financial expenses soared to 248 million yuan, a year-on-year increase of 3479%, mainly due to two reasons: large new loans from last year’s acquisitions increased interest expenses to 141 million yuan, up 41% year-on-year; at the same time, the rapid appreciation of the RMB against the US dollar caused significant exchange losses, and some hedging operations did not fully offset this. R&D investment continues to increase, with R&D expenses of 371 million yuan, up 34.88% year-on-year, focusing mainly on new-generation high-speed optical chips, optical modules, and AI PCB fields. Inventory impairment pressure rose, with asset impairment losses hitting 104 million yuan, up 255% year-on-year, mainly due to increased inventory write-down provisions. The dynamic changes in inventory structure need attention. Construction in Progress and Capital Expenditure Both Surge, Long-term Loans Rise to 8.2 Billion To meet the explosive orders brought by AI data center demand, Dongshan Precision is vigorously expanding production capacity. By the end of Q1, construction in progress amounted to 3.448 billion yuan, an increase of 46.96% from the beginning of the year, mainly driven by investment in optical module (including optical chip) and AI PCB production lines. Correspondingly, capital expenditures this quarter climbed sharply, with cash outflows for the purchase and construction of fixed and long-term assets reaching 2.16 billion yuan, almost doubling year-on-year. With the payment of the remaining 464 million yuan for the source photonics equity acquisition this period, net cash outflow from investing activities reached 2.528 billion yuan, up 160% year-on-year. To match the funding needed for rapid expansion, the company has substantially increased borrowing. Net inflow from financing activities was 2.401 billion yuan, a year-on-year surge of 797%, with 5.607 billion yuan in new loans; long-term loan balance rose from 6.375 billion yuan at year-beginning to 8.231 billion yuan. The asset-liability ratio rose slightly in response, but remains controllable overall, though financial leverage is now at a high level. Operating Cash Flow Steady, FX Fluctuations Drag Comprehensive Income Net cash inflow from operating activities was 1.127 billion yuan, down 17.48% year-on-year, but the absolute level remains solid. Cash received from sales of goods reached 13.261 billion yuan, basically matching revenue, reflecting good receivables quality. Exchange rate fluctuations became a major disruptive factor this quarter. Due to the rapid appreciation of the RMB, FX changes had a negative impact of 95.82 million yuan on cash and cash equivalents, compared to a positive contribution of 17.58 million yuan in the same period last year, creating a year-on-year gap of about 650 million yuan. This factor also directly shrank other comprehensive income, leading to a net after-tax loss on other comprehensive income of 60.38 million yuan, and the total comprehensive income of 1.064 billion yuan was lower than the net profit of 1.124 billion yuan. Ending cash balance was 8.945 billion yuan, up about 1.3 billion yuan from the beginning of the year. Together with approved new borrowings, the company’s short-term liquidity remains ample and can support ongoing capacity expansion plans. Risk Warning and Disclaimer The market has risks; investment requires caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of any individual user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their personal circumstances. Investment decisions made based on this article are at one's own risk.