Where Has the 120 Billion Yuan Been Allocated? STAR Market Companies Disclose Q3 Performance

By Zhang Chi, Financial Times

As a showcase of China's "hard-tech" capabilities, all 592 companies listed on the STAR Market of Shanghai Stock Exchange (SSE) have disclosed their financial results for the first three quarters of 2025. The segment reported total R&D expenditure of nearly RMB 120 billion and revenue exceeding RMB 1.1 trillion, with net profit in the third quarter surging 75% year-on-year. These results not only highlight the resilience of hard-tech enterprises amid external pressures but also underscore the central role of R&D-driven innovation in corporate growth.

Ming Ming, Chief Economist at CITIC Securities, noted that China's development priorities over the next five years will shift comprehensively toward technology-driven growth. High-tech companies are expected to continue ramping up R&D investment, while key industries such as integrated circuits and artificial intelligence will accelerate the formation of new quality productive forces, laying a solid foundation for achieving a high level of technological self-reliance and self-strengthening during the 15th Five-Year Plan period. Industry insiders broadly agree that, supported by ongoing policy initiatives, the STAR Market will continue to play a pivotal role in nurturing hard-tech enterprises and bolstering technological self-reliance.

Steady Improvement in Growth Quality

In the first three quarters of 2025, STAR Market companies staged a strong rebound, accompanied by steady improvement in growth quality. According to data from the SSE, the segment recorded operating revenue of RMB 1,105.011 billion, up 7.9% year-on-year, and net profit of RMB 49.268 billion, an 8.9% increase. Sub-sector performances were particularly notable: the 17 photovoltaic companies narrowed their combined net loss by 28% quarter-on-quarter; revenue among 19 lithium battery companies rose 7% year-on-year, achieving a collective net profit of RMB 1.02 billion and reversing prior losses. In the third quarter alone, their revenue increased 17% year-on-year.

The distribution of results reflects "broad-based growth and an optimized structure": more than 70% of companies reported revenue growth, nearly 60% achieved net profit growth, 158 companies saw net profit rise by over 50%, and 46 companies returned to profitability. Both leading and fast-growing firms contributed to momentum: constituents of the STAR 50 Index accounted for 46% of the segment's revenue and 50% of its net profit, serving as a "ballast". Meanwhile, companies in the STAR 100 Index posted year-on-year revenue and net profit growth of 12% and 134%, respectively, becoming the "vanguard" of expansion.

R&D Spending 2.4 Times Net Profit

R&D investment remains the core competitive strength of STAR Market enterprises. Total R&D spending reached RMB 119.745 billion in the first three quarters—2.4 times the segment's net profit—with a median R&D-to-revenue ratio of 12.4%, far ahead of other A-share boards. Significant breakthroughs are emerging: Vazyme's recombinant human albumin injection became the world's first Class I innovative drug produced using "rice-expressed" technology, while QuantumCTek achieved mass production of the world's first four-channel ultra-low-noise semiconductor single-photon detector. The STAR Market's "1+6" reform has also begun to deliver results, with 35 pre-revenue companies showing strong momentum. Cambricon has remained profitable for four consecutive quarters, and BeiGene's single-quarter revenue surpassed RMB 10 billion.

Competitive Edge Strengthens in Key Industries

"The STAR Market continues to leverage institutional innovation as a 'test bed' for capital market reforms, and will attract and cultivate more world-class technology companies. More tech-innovation champions will undoubtedly emerge", said Fu Hao, SSE Executive Vice President, at the recent SSE Global Investors Conference. STAR Market companies are already standing out across various hard-tech tracks.

In the integrated circuit sector, 121 companies recorded a 25% year-on-year increase in revenue and a 67% rise in net profit in the first three quarters. SMIC and Hua Hong maintained high capacity utilization, while chip design firms reported a 141% jump in net profit. Semiconductor equipment makers such as AMEC further accelerated domestic substitution.

Artificial intelligence has become a new pillar of growth. Cambricon's revenue surged nearly 24-fold, Hygon Information grew 55%, and the net profits of Accelink Technologies and Shengyi Electronics increased seven-fold and nearly five-fold, respectively. Memory companies such as Montage Technology and Longsys also saw performance rebound.

The biopharmaceutical industry likewise delivered strong results, with revenue up 11% year-on-year and net profit up 48% in the first three quarters. Companies in the sector supported the approval and launch of nine Class I innovative drugs and completed 16 overseas business development deals with potential aggregate value exceeding USD 13 billion, driving revenue growth of 18% and reducing net losses by 65%.