Author | Ren Tianqin

Editor | Wang Yimo

Net Profit Nearly Doubles, but Operating Cash Flow Outflow Exceeds 8.5 Billion Yuan

On October 29, Unisplendour Corporation (000938.SZ) released a third-quarter report that presents a striking contrast: revenue for the first three quarters exceeded 100 billion yuan and net profit nearly doubled year on year, yet net profit attributable to shareholders plunged 56% quarter on quarter in the third quarter, while net operating cash flow for the first three quarters showed an outflow of more than 8.5 billion yuan.

AI computing power construction has brought in more business, but it has not delivered a corresponding increase in profit. As demand for computing power continues to heat up, how much money can equipment suppliers actually make from it?

Why Did Profit Fall Back?

In the first three quarters of 2026, Unisplendour Corporation achieved revenue of 102.155 billion yuan, up 32.12% year on year; net profit attributable to shareholders was 2.773 billion yuan, up 97.53% year on year; and net profit attributable to shareholders after deducting non-recurring gains and losses was 2.456 billion yuan, up 68.25% year on year.

Third-quarter revenue was 38.640 billion yuan, up 29.24% year on year; net profit attributable to shareholders was 606 million yuan, up 66.97% year on year.

Image source: Unisplendour Corporation announcement

Year-on-year performance was impressive, but the quarter-on-quarter picture showed a clear contrast. Net profit attributable to shareholders was 1.379 billion yuan in the second quarter, falling to 606 million yuan in the third quarter—a 56% decline quarter on quarter.

Why did profit suddenly fall back?

First, the near-doubling of net profit attributable to shareholders in the first three quarters did not come entirely from growth in the main business.

At the end of May 2026, Unisplendour Corporation completed the acquisition of a 6.98% equity stake in New H3C, raising its shareholding from 81% to 87.98%, and the listed company's share of subsidiary profits increased accordingly.

At the same time, the financial liability formed by previous equity acquisition obligations matured, and related interest expenses were no longer accrued. The equity transaction also brought certain non-recurring gains.

These two gains were concentrated in the first half of the year. After the closing at the end of May, this portion of non-recurring gains no longer occurred. Therefore, the specific reasons for the quarter-on-quarter decline in the third quarter still require further analysis in light of product structure, costs and expenses.

Cash flow deserves more attention.

In the first three quarters, net cash flow from operating activities was -8.576 billion yuan, while net profit attributable to shareholders in the same period reached 2.773 billion yuan. The company explained that this was mainly due to the expansion of subsidiary business scale and increased procurement payments.

Server and network equipment suppliers usually need to purchase chips, storage and other components in advance, while customer payments may not arrive until after project delivery and acceptance.

The bigger the business, the more funds it may tie up. How to convert orders into cash in a timely manner has become a new test for Unisplendour Corporation.

New H3C Carries the Load

Unisplendour Corporation's 100 billion yuan in revenue is mainly contributed by its core subsidiary, New H3C.

In the first three quarters, New H3C achieved revenue of 80.983 billion yuan, up 35.83% year on year, accounting for nearly 80% of the listed company's total revenue; net profit was 3.133 billion yuan, up 23.92% year on year.

Revenue growth was significantly higher than profit growth, and the divergence in profit elasticity deserves attention.

New H3C is an important domestic ICT infrastructure supplier, with products covering servers, switches, storage, network security and cloud computing, and has long served governments, financial institutions, telecom operators and large enterprises.

Now, AI computing power construction has opened up new markets for it.

As demand for AI training and inference grows, intelligent computing servers, high-speed switches and large computing clusters have become new procurement priorities. Around its "computing power x connectivity" strategy, New H3C has deployed products such as AI servers, 800G switches and intelligent computing super nodes.

But the new business brings not only orders, but also pressure on profit margins.

Traditional enterprise network equipment usually carries higher gross profit margins, whereas customized server procurement by internet customers is large in scale and highly price-competitive, leaving relatively limited profit space.

In the first half of 2026, revenue from Unisplendour Corporation's ICT infrastructure and services business grew 41.30% year on year, but gross profit margin fell 2.77 percentage points to 15.28%.

More products were sold, but the pace of gross profit expansion could not keep up with revenue. However, detailed data are still lacking on how much of the third-quarter quarter-on-quarter profit decline stemmed from changes in product structure.

Overseas business is also growing. In the first three quarters, New H3C's international business revenue was 4.785 billion yuan, up 37.59% year on year, but the overall scale remains relatively limited.

The Computing Power Business Has Changed

The difficulties facing Unisplendour Corporation also reflect changes underway in China's AI infrastructure industry.

AI investment continues to grow, and demand for servers, switches and other equipment is expanding, but profitability varies markedly across different links in the industrial chain.

Companies that master core chips and underlying key technologies may obtain higher profit margins; companies undertaking complete machine manufacturing, system integration and project delivery continue to face centralized procurement bargaining pressure and working capital occupation.

In particular, centralized procurement by large internet companies and intelligent computing centers gives customers strong bargaining power. The larger the order, the less profitable it may be for suppliers.

Unisplendour Corporation's advantage lies in its complete product line, being able to simultaneously provide servers, networking, storage and related software services, and having mature government and enterprise customer channels.

As intelligent computing centers shift from a concentrated construction period to a long-term operation stage, customers are no longer concerned only with how many GPUs to purchase, but also with how to improve computing power utilization, reduce energy consumption, and optimize network and system operations and maintenance.

If New H3C can extend from selling hardware to cluster deployment, network optimization and continuous operations and maintenance, it will have opportunities to obtain more high value-added revenue. However, Huawei, ZTE Corporation, Inspur Information and other companies are also competing for this market, and competition will not be easy.

What the capital market is watching is no longer just how many orders Unisplendour Corporation can obtain, but how much profit the orders can ultimately contribute.

Next, New H3C's product gross profit margin, accounts receivable and inventory turnover efficiency, as well as the profit contribution of high value-added businesses, are all worth continued tracking.

Revenue of 100 billion yuan proves that Unisplendour Corporation has seized the market opportunity in computing power construction, but the quarter-on-quarter decline in third-quarter profit and pressure on operating cash flow also expose the other side of scale expansion.

For Unisplendour Corporation, the real test is no longer just how much equipment it can sell, but how much profit these businesses can ultimately leave behind and how much cash can be recovered.