IPO outlook | ICT giant Ziguang Co., Ltd. sprints A+H: profitability is declining, and “shovel sellers” dividends are not powerful?

The “A+H” camp of Hong Kong stocks is about to welcome a “super invisible champion”.

On December 3, Ziguang Co., Ltd. (hereinafter referred to as “Ziguang Co., Ltd.”), a leading digital solutions company in China, officially submitted a listing application to the main board of the Hong Kong Stock Exchange. CITIC Construction Investment International, BNP Paribas and CMB International acted as co-sponsors.

The company is a leading ICT infrastructure and service provider in China. Its development history dates back to 1988. After more than 30 years of development, the company has become a leading enterprise in the field of next-generation information and communication. According to Frost & Sullivan data, according to 2024 revenue, Ziguang Co., Ltd. ranked third in China's digital infrastructure market, with a market share of 8.6%, and ranked at the top of the industry in market segments such as network infrastructure and computing infrastructure.

At the same time, Ziguang Co., Ltd. is also “highly experienced” in the secondary market. As early as 1999, the company completed listing on the Shenzhen Stock Exchange. By the close of trading on December 8, the stock price of Ziguang Co., Ltd. (000938.SZ) was 2,543 billion yuan, with a total market value of 72.7 billion yuan. Once the company successfully lands on the Hong Kong Stock Exchange, it will also achieve an “A+H” listing pattern.

“AB side” of performance: decline in revenue vs. decline in profit

According to Zhitong Finance, Ziguang Co., Ltd. is the world's leading provider of digital solutions. These solutions include ICT infrastructure products, software and cloud services, and are mainly used in scenarios such as artificial intelligence training and reasoning, and big data processing.

Among them, the company's business is mainly divided into two major parts: one is digital infrastructure, which includes the design, development and supply of ICT infrastructure products, and the provision of cloud services and system integration services; the other is ICT product distribution. Among these, the company's main business is carried out by core subsidiaries such as Xinhua 3, Ziguang Cloud, Ziguang Digital, and Ziguang Software.

Based on the above business layout, Ziguang Co., Ltd. is also known as the “shovel seller in the AI era” — that is, unlike the “nuggets” that the entire industry fervently ends up, Ziguang Co., Ltd. mainly sells indispensable “shovels” (AI computing power infrastructure and tools) to all diggers.

Thanks to this strategic idea, in the past year or two, with the rapid advent of the AI era, Ziguang Co., Ltd.'s revenue has also entered the “fast track” since entering 2025.

According to the prospectus, the revenue of Ziguang Co., Ltd. has maintained a steady growth trend from 2022 to 2024, achieving revenue of 77.752 billion yuan, 77.538 billion yuan, and 790.24 respectively, increasing year by year. By the first half of 2025, the company's revenue grew rapidly, at 47.425 billion yuan, up 25% year on year, mainly driven by demand for products such as AI servers.

However, the profit performance of Ziguang Co., Ltd. contrasted with revenue growth. From 2022 to 2024, the company achieved net profit of 3,742 billion yuan, 3,685 billion yuan and 1,982 billion yuan respectively, declining year by year. As of the first half of 2025, the company's net profit was 1,285 billion yuan, a year-on-year decrease of 25.53%.

At the same time, the company's gross sales margin also showed a continuous downward trend. From 2022 to the first half of 2025, the company's overall gross margin was 19.8%, 18.5%, 16%, and 14.4%, respectively, which is also a core factor eroding its profit margins.

Looking further, this probably has something to do with the strategic choice of Ziguang Co., Ltd. — that is, the company is transforming from a high-margin traditional network equipment provider in the past to a “full-stack infrastructure provider in the AI era.” The primary goal at this stage is to seize the core entry and market share (“seller” position) of future AI computing power, rather than maximizing short-term profits. Therefore, high revenue growth and declining profits are typical characteristics of the transition period.

Among these, high-intensity R&D investment and rising sales and financial expenses are also “necessary costs” for the company to invest in the future. According to the prospectus, from 2022 to 2024, the company invested 5.299 billion yuan, 5.643 billion yuan, and 5.101 billion yuan respectively; sales expenses were 4.251 billion yuan, 4.287 billion yuan, and 4.144 billion yuan respectively.

As can be seen from the above, the decline in net profit of Ziguang Co., Ltd. is essentially the phased cost it paid in the early days of the AI industry to establish its position as a “seller” and seize market size and key technological heights. This performance is fully consistent with its strategy of financing its listing in Hong Kong to strengthen technology investment and global expansion, and is two sides of a coin in its current stage of development.

Is the digital economy's “gold rush” = “shovel seller” dividend still there?

I have to say that the “gold rush” of the digital economy continues.

With the government's continued focus on the digital economy and deepening policy support, and the growing demand for digital transformation in various industries in the wave of AI innovation, the digital solutions market is expected to maintain steady growth.

According to Frost & Sullivan data, China's digital solutions market grew from 1.0 trillion yuan in 2020 to 1.9 trillion yuan in 2024, with a compound annual growth rate of 18.1%. It is estimated that by 2029, China's digital solutions market will reach 4.4 trillion yuan, with a compound annual growth rate of 18.9%.

Among them, the digital infrastructure market grew from 0.3 trillion yuan in 2020 to 0.6 trillion yuan in 2024, with a compound annual growth rate of 16.0% from 2020 to 2024. Furthermore, the cloud and intelligent platform market showed a stronger growth trend, growing from 0.2 trillion yuan in 2020 to 0.6 trillion yuan in 2024, and is expected to increase to 1.8 trillion yuan by 2029 as enterprise demand continues to grow.

All in all, the track where Ziguang Co., Ltd. is located is a golden track driven by national strategy, led by technological innovation, with a huge market size and a period of rapid growth. The industry is very certain and growing.

It is worth mentioning that these track trends are also highly compatible with the core strengths of Ziguang Co., Ltd.

On the one hand, the company has full-stack ICT technology capabilities, that is, it covers the complete industrial chain of “core - cloud - network - computing - storage - security - end”, and can provide integrated solutions for deep collaboration between software and hardware. In the AI era, customer demand is shifting from single-point procurement to overall solutions. This ability is a key threshold for undertaking large-scale government enterprises and intelligent computing center projects. Furthermore, the company's “Computing-Storage-Network-Security-Cloud” full-stack product line also makes it one of the few vendors that can provide integrated intelligent computing solutions.

On the other hand, the company's technology card is accurate: on the network, the company released an 800G intelligent computing switch and a new network architecture (DDC). In terms of computing power, a “supernode” server was launched to optimize GPU cluster efficiency. In terms of energy efficiency, we have a full-stack liquid cooling solution from cold plate to immersion. These investments accurately target the three core pain points of intelligent computing centers: high performance, high density, and high energy consumption, so that they can stay ahead in the construction of next-generation data centers.

In addition, the industry's landing advantages are also significant: the company's customer base covers a wide range of industries, including the Internet, communications, government, finance, healthcare, education, transportation, manufacturing, utilities, energy and construction. The deep accumulation in the government and enterprise markets has also given it a natural channel and scenario advantage during the AI industrialization implementation stage.

Of course, the establishment and maintenance of these advantages also comes with corresponding costs and risks.

First, in order to seize AI market share (such as servers), the gross margin of Ziguang Co., Ltd. is under pressure. How to balance market share and profit is currently a core challenge. Second, R&D and capital expenses are huge. Maintaining the leading edge in full-stack technology requires continuous huge investment, which is a long-term test for the company's cash flow and capital structure.

As can be seen from the above, Ziguang Co., Ltd. is standing at the head of a huge wave of industrial upgrading reshaped by AI. Its greatest investment value is the scarcity of combining full-stack technical capabilities with deep industry markets to drive large-scale industrialization of AI. Investors need to pay attention to when their gross margin will rise steadily in the short term. In the long run, attention should be paid to whether its huge investment can be transformed into a sustainable competitive advantage and market share.