The setup
Biwin Storage (深圳佰维存储, 688525.SH) filed its third-quarter report on the evening of , Beijing time, and the shares closed at RMB 138.10 (~US$20.74) on , down 15.79% from RMB 164.00 (market data, not a filing figure). Quarterly revenue was RMB 6.14B (~US$922M), up 130.67% on the year and down 29.9% on the second quarter's RMB 8.76B (~US$1.32B). Net profit attributable to shareholders was RMB 1.60B (~US$241M), up 525.34% on the year and down 62.4% on the quarter. For the nine months, revenue was RMB 21.72B (~US$3.26B, +230.30%) and attributable net profit RMB 8.77B (~US$1.32B). USD conversions of key figures on this page use ~6.66 CNY/USD (onshore, ) and are approximate.
The year-on-year lines are the ones the release leads with, and they are the least useful numbers in it. A year ago Biwin was coming out of a loss, so any quarter in 2026 looks enormous against it. The comparison that matters is against the second quarter, and against the balance sheet. Revenue fell by RMB 2.62B between June and September. Over the same three months inventory rose by RMB 5.89B to RMB 24.05B (~US$3.61B), prepayments rose by RMB 5.28B to RMB 7.38B (~US$1.11B), and interest-bearing debt rose by RMB 6.89B to RMB 23.23B (~US$3.49B). The company sold less and bought much more.
That is the frame for the rest of the page. In August we called Biwin's margin a procurement bet, locked in by two lock-volume, lock-price agreements worth US$3.3608B in total, and we called the roughly 50% net margin of the second quarter a run-rate as long as contract memory prices held. Contract prices did hold. The margin did not: gross margin fell from 56.0% to 42.8%, and net margin from 48.7% to 26.1%. Our call from here is that the third quarter is the first quarter of the bill, not a pause. The expensive locked supply is now flowing into the cost average, the company is paying for it ahead of delivery, and the cash comes from banks rather than customers.
The test is dated. By the Shanghai exchange's rules require a full-year pre-announcement from any listed company whose profit moves by 50% or more, which Biwin's will. A full-year attributable net profit below RMB 11.67B (~US$1.75B; nine months plus a first-quarter-sized fourth quarter) confirms the call. Above RMB 13.03B (~US$1.96B), which needs a fourth quarter as good as the second, refutes it.
The numbers
| RMB millions | Q3 25 | Q2 26 | Q3 26 | Q/Q | Y/Y |
|---|---|---|---|---|---|
| Operating revenue | 2,662.8 | 8,760.7 | 6,142.2 | −29.9% | +130.67% |
| Cost of sales | 2,103.0 | 3,856.1 | 3,512.9 | 57.2% of revenue | 44.0% in Q2 |
| Gross profit | 559.8 | 4,904.6 | 2,629.3 | 42.8% margin | 21.0% a year ago |
| R&D | 137.0 | 188.1 | 269.4 | 4.4% of revenue | +96.60% |
| Finance costs | 50.2 | 87.9 | 117.6 | +33.9% | |
| Fair-value change | 36.7 | 571.3 | (310.9) | swing of RMB 882.1M on the quarter | |
| Operating profit (filed subtotal) | 263.3 | 5,004.7 | 1,714.3 | 27.9% margin | |
| Net profit to parent | 256.2 | 4,266.6 | 1,602.2 | −62.4% | +525.34% |
| Net profit to parent, ex-items | 213.3 | 3,816.1 | 1,834.2 | −51.9% | +759.88% |
| Operating cash flow | (782.6) | (3,554.8) | (3,779.5) | seventh negative quarter in a row | |
| Inventory (quarter-end) | 5,695.1 | 18,167.5 | 24,053.5 | +5,886.0 | 391.6% of revenue |
| Prepayments (quarter-end) | 325.0 | 2,093.9 | 7,375.4 | +5,281.5 | 120.1% of revenue |
| Interest-bearing debt | 6,637.3 | 16,337.8 | 23,229.9 | +6,892.1 | 1.66x parent equity |
| Monetary funds | 1,594.4 | 3,151.4 | 3,791.5 | +640.1 | |
Biwin files under PRC accounting standards and its third-quarter report is unaudited. The report gives a nine-month income statement and cash-flow statement, not a three-month one, so every third-quarter flow on this page is the nine-month figure less the half-year figure, and every second-quarter flow is the half-year figure less the first quarter. The balance sheet is a point in time and needs no derivation. Interest-bearing debt is short-term borrowings (RMB 10.72B), long-term borrowings (RMB 10.67B) and the current portion of long-term debt (RMB 1.84B).
One line runs against the rest. Ex-items profit, RMB 1.83B (~US$275M), is larger than headline profit, RMB 1.60B, because RMB 231.98M of non-recurring items went against the company this quarter, almost all of it a fair-value loss on financial assets. In the first half it ran the other way: the gains on Biwin's stakes in other chip companies lifted headline profit above the ex-items figure, and our August page noted that a tenth of the half-year headline did not come from selling storage. The third quarter gave part of that back. On the ex-items line the quarterly fall is 51.9%, not 62.4%. That is the kindest reading of the quarter, and it is still a halving.
The release explains the nine months in five numbered points and the quarter in none. It credits "the explosion of AI computing power and the storage industry entering a high-prosperity cycle" for the growth, names Meta, Google, Alibaba and Xiaomi among the buyers of its ePOP parts for AI glasses and watches, and puts nine-month revenue from "AI emerging edge-side" storage at about RMB 4.823B, up 389.64%. It explains the negative operating cash flow in one clause: "mainly due to the increase in operating procurement expenditure." It does not say why revenue fell in the third quarter. The rest of this page tries to.
The release's own explanation for the year, in full: growth "mainly benefited from the explosion of AI computing power and the storage industry entering a high-prosperity cycle; the company's product and customer structure continued to be optimized." Decode: the two causes have different shelf lives. "A high-prosperity cycle" is the memory price, and it belongs to the industry, not to Biwin. "Product and customer structure" is the part Biwin owns: glasses and watch design wins at Meta and Google. Of the two, only the second survives a turn in the cycle. On the nine-month numbers it was about RMB 4.823B of RMB 21.72B of revenue, 22.2%.
The rest of this dive is for paid subscribers.
The headline numbers are above. The 13 sections below carry the mechanism, the peer read, the valuation work, and the dated tests that decide it.
- Seven quarters: the level before the delta
- The warehouse, and why it kept growing
- Where the margin went
- The cash and the banks
- The line below the line: stakes, buybacks and the other payable
- The cost line the capex writes
- Connecting the dots
- The guide and the December bar
- Valuation
- The strongest case against this read
- What we'd watch
- The trade (analysis, not advice)
- Bottom line
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