Digital China (861) Q2 2026 earnings summary

Executive summary

• H1 2026 revenue fell 15.57% YoY to RMB6.641bn; gross profit was RMB992.6m, and loss attributable to owners was RMB52.145m versus profit of RMB15.207m a year earlier.

• A RMB304.4m litigation provision drove much of the reported loss; excluding it and related tax effects, parent-attributable profit was ~RMB36m.

• Signed but undelivered contracts totaled RMB7.484bn; new contracts were RMB6.427bn, including RMB219m in AI service-based contracts.

• Strategic priorities span full-stack AI, data intelligence, compute services and integrated supply-chain scenarios, with client co-creation and reusable capabilities supporting growth.

Financial highlights

• Gross profit was RMB992.6m versus RMB1,032.5m; gross margin increased 1.82 percentage points YoY.

• Loss before tax was RMB360.7m versus RMB85.5m; net loss was RMB289.5m versus RMB68.5m.

• Other expenses, net rose to RMB768.1m from RMB471.9m, including the RMB304.4m litigation provision and RMB129.9m impairment of receivables and contract assets.

• Adjusted net loss was RMB49.5m versus RMB46.2m; adjusted EBITDA was RMB100.8m versus RMB129.2m.

Outlook and guidance

• H2 priorities include scaling AI First FDE, replicating full-stack AI across computing power, data and applications, and embedding data intelligence in supply-chain scenarios.

• AI service-based revenue reached RMB39.39m, up 52% YoY; priorities include productised replication and continuous operation beyond one-off project delivery.

• Supply-chain plans emphasize vertical focus, inventory upgrades, warehousing ecosystem development, operations platforms, service upgrades and lean operations.

• Compute strategy extends from infrastructure delivery and O&M into full-lifecycle AIDC compute services and compute operations.

• RMB210m of unutilised rights-issue proceeds is expected to be deployed by 30 June 2027 for healthcare big data or other suitable investments and acquisitions.