Key Takeaways
Sugon is accelerating its push into China’s AI infrastructure race, planning an 8 billion yuan convertible bond to expand its AI computing power after a 34% surge in core 2025 profit.
The company attributed a 51.75% decline in operating cash flow to a large payment for a development project and the purchase of large-denomination certificates of deposit to improve returns on idle funds, according to a company statement.
For the full year 2025, Sugon reported total revenue of 14.96 billion yuan, up 13.81%, and net profit attributable to shareholders of 2.18 billion yuan, a 13.87% increase. The company proposed a cash dividend of 658 million yuan, representing 30.24% of net profit.
The 8 billion yuan bond signals a major strategic pivot, positioning Sugon to capture a larger share of China's booming AI infrastructure market, competing with giants like Huawei and Alibaba. The funds are earmarked for advanced AI clusters, next-gen training systems, and domestic storage solutions.
The divergence between Sugon's net profit growth (13.87%) and its non-recurring net profit growth (33.97%) highlights strengthening underlying performance. The increase in core profitability came despite a 200 million yuan drop in non-recurring gains, mainly due to a reduction in government subsidies from 529 million yuan in 2024 to 269 million yuan in 2025.
A significant driver of improved margins was the software and services segment. Revenue from software development, system integration, and technical services jumped 75.34% to 2.45 billion yuan, with its gross margin climbing 3.53 percentage points to 47.25%. This offset the flatter performance of the IT equipment division, which grew 6.81% to 12.5 billion yuan in revenue.
However, the company's customer concentration remains high, with the top five customers accounting for 82.56% of total sales. Notably, the top two customers were new, with the largest single customer contributing 2.9 billion yuan, or 19.36% of total revenue. R&D expenses also increased by 29.33% to 1.67 billion yuan, reflecting investment in new high-performance computing products.
This article is for informational purposes only and does not constitute investment advice.
