Sugon’s Q1 revenue increased by 24% to 3.2 billion yuan, R&D expenses surged by 52% to 590 million yuan | Financial Report Insights

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Sugon achieved operating revenue of 3.199 billion yuan in the first quarter of 2026, up 23.71% year-on-year; net profit attributable to shareholders was 228 million yuan, up 22.19% year-on-year; net profit excluding non-recurring gains and losses was 164 million yuan, up 53.30% year-on-year.

The growth rate of net profit excluding non-recurring items exceeded the growth rate of revenue. According to the company’s disclosure, on one hand, the continuous expansion of core businesses drove the increase in profitability; on the other hand, government subsidies previously approved to subsidiaries have been fully amortized as per regulations, resulting in a decrease in related non-recurring income. Earnings per share rose from 0.128 yuan in the same period last year to 0.156 yuan, and the weighted average return on net assets reached 1.02%, up 0.11 percentage points year-on-year.

In terms of R&D expenses, in the first quarter it reached 592 million yuan, up 51.7% year-on-year and accounting for about 18.5% of operating revenue. In addition, the company advanced its convertible bond issuance plan in the first quarter.

Revenue and net profit both increased, impairment losses expanded

In the first quarter of 2026, Sugon achieved total operating revenue of 3.199 billion yuan, an increase of 613 million yuan over 2.586 billion yuan in the same period last year, a growth rate of 23.71%. Operating costs were 2.35 billion yuan, up 22.9% year-on-year, with the growth rate of costs slightly lower than that of revenue, and the gross profit margin slightly improved.

Total profit was 274 million yuan, up 18.12% year-on-year; net profit was 192 million yuan, up 13.3% year-on-year. Net profit attributable to shareholders was 228 million yuan, higher than overall net profit, mainly because minority shareholders incurred losses of 35.89 million yuan, so parent company shareholders took on a larger share of profits.

Notably, in this quarter, credit impairment loss sharply reversed from approximately 7.9 million yuan last year to 62.33 million yuan, mainly due to large provisions for accounts receivable impairment this period, which somewhat suppressed further release of operating profit. Excluding this effect, the actual improvement in core business profitability would be even more significant.

Surge in R&D investment leads to cost overrun, investment income supports profit

R&D investment is one of the most prominent data in this quarterly report. R&D expenditure in the first quarter reached 592 million yuan, up 51.7% from 390 million yuan in the same period last year and accounting for about 18.5% of operating revenue. This level of investment is relatively high and aligns with Sugon’s strategic positioning as a core supplier of domestic high-performance computing and AI computing power.

Driven by the wave of large AI models, domestic computing power demand continues to be released. Sugon's increased investment in R&D helps consolidate technology barriers and reserve capabilities for product iteration. Notably, high R&D spending pushed total operating costs to 3.202 billion yuan, slightly exceeding total operating revenue of 3.199 billion yuan. Operating profit for the period remained positive mainly due to 184 million yuan in investment income contributed by affiliated companies.

Investment income up 43%, affiliates contribute nearly 190 million

This quarter, the company's total investment income was 187 million yuan, up 43.4% year-on-year, of which investment income from associates and joint ventures was 184 million yuan, providing important support to total profit. Long-term equity investment reached 9.239 billion yuan, an increase of about 272 million yuan compared to the end of last year, indicating the company is still expanding its ecosystem investment layout.

This structure shows that Sugon's profitability model does not simply rely on product sales, but has built a platform-oriented architecture centered around high-performance computing and radiating outward through its industrial chain. By investing in affiliated companies to obtain stable equity income, the company is gradually forming a dual-engine profitability model driven by both main business sales and investment income.

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