Luxshare Precision Industry reported first-quarter results with strong revenue growth and higher profit, while rising costs and negative operating cash flow underscored pressure on earnings quality.
The company posted revenue of CNY83.89 billion (approx. US$12.27 billion), up 35.77% from CNY61.79 billion a year earlier, according to its quarterly report released April 29. Net profit attributable to shareholders rose 20.24% year-over-year to CNY3.66 billion, broadly in line with prior guidance.
Revenue growth supported by scale expansion
Luxshare said revenue growth was driven by increased sales volume and contributions from newly consolidated subsidiaries, reflecting continued expansion across consumer electronics, communications, data center, and automotive electronics businesses.
Net profit was partly supported by non-recurring items. Non-recurring gains totaled CNY884 million, including CNY749 million from changes in fair value and disposal of financial assets, excluding hedging, and CNY272 million from entrusted investments. Excluding these items, net profit rose 15.22% year-over-year to CNY2.78 billion.
Basic earnings per share increased to CNY0.50 from CNY0.42 a year earlier. Return on equity edged down to 4.12%, reflecting faster growth in equity than net profit. Gross margin stood at 11.92%.
Financial expenses surge as costs rise
Operating expenses increased across major categories. Selling expenses rose 148.43% year-over-year to CNY722 million, while administrative expenses increased 95.13% to CNY2.83 billion, driven by higher personnel costs, depreciation, and contributions from newly consolidated subsidiaries.
Research and development spending grew 40.89% to CNY3.02 billion, reflecting continued investment in product development and technology programs.
Financial expenses rose sharply to CNY1.05 billion from a net gain of CNY29 million a year earlier, marking a 3,763.54% increase. The company attributed the increase primarily to higher interest expenses and foreign exchange losses.
Cash flow remains under pressure
Operating cash flow remained negative at -CNY7.07 billion, compared with -CNY6.69 billion a year earlier, as payments for wages, bonuses, and supplier settlements increased.
Accounts receivable declined 10.10% from the beginning of the period to CNY43.55 billion, while notes receivable rose 177.08% to CNY1.45 billion, reflecting changes in payment structures. Inventory increased 8.74% to CNY46.03 billion, which the company said was due to strategic stockpiling.
Investment cash outflows widened to -CNY14.92 billion, while cash used for capital expenditures and long-term assets totaled CNY5.54 billion. Financing cash inflows rose 38.03% year-over-year to CNY30.61 billion, supported by increased borrowing and capital injections.
The company received CNY56.55 billion in loan proceeds and CNY1.67 billion from equity financing, while repaying CNY27.26 billion in debt. Its debt-to-asset ratio rose to 66.53%, up from the previous quarter and a year earlier.
Risks include rising leverage and funding pressure
Luxshare said risks include elevated financial costs, continued pressure on operating cash flow, and increased reliance on external financing. The company also flagged potential risks related to settlement of notes receivable and uncertainties in investment returns.
Separately, TF International Securities analyst Ming-Chi Kuo said in a report that industry checks indicate that OpenAI is collaborating with Qualcomm and MediaTek to develop smartphone processors. Kuo said Luxshare is expected to serve as a system co-design and manufacturing partner, with mass production targeted for 2028.
Compiled by DIGITIMES Asia, Apr. 2026
Article edited by Jack Wu
