海光信息 (688041.SH): Hygon 3Q26: GPM recovers, but supply constraints weigh on growth and cash flow

Hygon reported 3Q26 results on October 20, 2026. Revenue reached RMB5.86bn, up 45.5% YoY and below our full-year 63% growth projection, likely due to supply constraints including HBM availability for DCUs and foundry capacity, as well as deferred revenue recognition. GPM recovered to 58.7% from 54.9% in 2Q26, helped by product-mix optimization. Server CPU demand remains robust on domestic substitution and agentic AI compute requirements, and Hygon launched its 1000-series CPUs for embedded and edge applications. However, operating cash outflow widened to RMB2.02bn, accounts receivable rose to RMB6.03bn, inventory and prepayments increased, and net borrowing inflow reached RMB2.74bn. We maintain Outperform with a price target of CNY450.