Key takeaway

The company launched its 2026 restricted stock incentive plan, proposing to grant 4.9943mn shares to 188 directors, senior executives, middle managers, and core technical and business personnel, accounting for 0.64% of total share capital. The assessment adopts a three-tier “company-business unit-individual” system. At the company level, net profit attributable to shareholders of the parent company in 2026-2028 must increase by at least 10%, 21%, and 33%, respectively, from 2025, implying a CAGR of approximately 10%. The company’s continued implementation of equity incentives will help strengthen the stability of its core team and advance high-end valve R&D, global market expansion, and new capacity build-up.

Event

On July 28, 2026, NEWAY released the draft of its 2026 restricted stock incentive plan. It proposes to grant 4.994259mn restricted shares to 188 participants at RMB27.02/share, with the restrictions to be lifted in three tranches of 50%, 30%, and 20%.

Quick Take

Incentive resources tilted toward core business personnel, further improving the long-term incentive mechanism

This incentive plan covers eight directors and senior executives, as well as 180 middle managers and core technical and business personnel. Of these, middle managers and core technical and business personnel will receive a combined 4.1895mn shares, accounting for 83.89% of the total grant. The allocation is tilted toward middle managers and core technical personnel, which will help stimulate the operational initiative and technological innovation of these key employees. The restricted shares will be issued by the company through a private placement at a grant price of RMB27.02/share. Based on the number of shares granted, participants will subscribe for approximately RMB135mn in aggregate.

The company’s 2023, 2024, and 2025 restricted stock incentive plans remain effective. The launch of this new plan continues its rolling equity incentive mechanism and will help further align the interests of core personnel with the company’s long-term operating results.

Three-tier assessment balances overall profitability and business divis ion performance, with targets reflecting the objective of steady growth At the company level, based on net profit attributable to shareholders of the parent company of RMB1.601bn in 2025, the company requires net profit attributable to shareholders of the parent company to increase by at least 10%, 21%, and 33% in 2026-2028, respectively, compared with 2025. This corresponds to no less than approximately RMB1.761bn, RMB1.937bn, and RMB2.129bn, respectively, representing a three -year CAGR of approximately 10%. On this basis, the company has introduced a further assessment at the business division level. The vesting ratio will be set at 0%, 50%, 75%, or 100% based on the achievement of the business divisions’ combined net profit attributable to shareholders of the parent company, while the actual vested amount will be calculated using individual performance multipliers across six grades from A to F. The three-tier “companybusiness division-individual” assessment further translates the overall profitability target into specific operating units, balancing the company’s overall development, business divisions’ operating contributions, and individual performance.

Continued improvements in high-end valve products and global market presence provide a business foundation for achieving the assessment targets Continued breakthroughs in high-end products are complemented by an increasingly robust global presence and system integration capabilities. The company has developed 11 major product series, including ball valves, butterfly valves, gate valves, safety valves, control valves, nuclear power valves, and subsea valves. These products serve sectors including oil and gas, chemicals, LNG, nuclear power, offshore engineering and shipbuilding, hydrogen energy, and water treatment. In 2025, the company completed the R&D of several highend valves and delivered its first nuclear Class 1 severe accident depressurization valve. Its HIPPS and pressure - reducing skid passed acceptance testing by international customers, extending its business capabilities from standalone valve supply to system solutions. The company also operates joint R&D centers in China, Italy, and the US. It has established a global marketing and service network through overseas subsidiaries, localized teams, inventory centers, and distributors, supporting continued breakthroughs in high-end products and overseas markets.

New capacity construction is progressing steadily and is expected to enhance delivery capabilities for high-end valves and system integration products. Construction of Phase II of the Neway Fluid Control highend industrial valve project commenced in April 2026. Covering approximately 30,600 square meters, the project plans to introduce smart manufacturing and Internet of Things systems. Once operational, it is designed to provide annual production capacity of more than 56,000 units of high-end industrial valves, actuators, automation equipment, and system integration products. The new capacity will further enhance the company’s supporting capabilities for high-end valve manufacturing and automation system integration, while improving its order intake and product delivery capabilities.

Investment recommendation: The incentive plan covers core management personnel, technical professionals, and key business personnel. It links the company’s overall profitability, business unit operating results, and individual performance, helping enhance team stability and align operating objectives. The company has a comprehensive industrial valve product portfolio and continues to achieve technological breakthroughs in ultra - low-temperature, high-temperature and high-pressure, nuclear power, deep-sea, and high-end casting and forging applications. It also has a well-established global marketing and service network and vertically integrated manufacturing capabilities. The company is expected to achieve operating revenue of RMB9.331bn, RMB11.025bn, and RMB12.915bn in 2026-2028, representing YoY growth of 20.13%, 18.15%, and 17.14%, respectively; net profit attributable to shareholders of the parent company is expected to reach RMB1.867bn, RMB2.295bn, and RMB2.736bn, representing YoY growth of 16.65%, 22.91%, and 19.21%, respectively, corresponding to PE multiples of 21.53x, 17.52x, and 14.69x, respectively. A “buy” rating is assigned.

Risks

(1) Risk of equity incentive assessment targets falling short of expectations: If downstream demand, market competition, or improvements in the company’s profitability fall short of expectations, some restricted shares may fail to vest;

(2) Risk of high-end product R&D and market expansion falling short of expectations: Nuclear power valves, ultra-low-temperature valves, subsea valves, and system integration products are difficult to develop and manufacture. If product validation, customer certification, project acquisition, or mass delivery progress falls short of expectations, the company’s high-end development and product mix upgrade may be affected;

(3) Risk of new capacity construction and utilization falling short of expectations: Phase II of the Neway Fluid Control project is still under construction. Delays in project construction, equipment installation, staffing, or capacity ramp-up, or insufficient incremental market demand, may affect the release of planned capacity and the project’s investment returns;

(4) Overseas operating and trade policy risks: The company operates in markets including North America, Europe, the Middle East, Southeast Asia, and West Africa. Changes in geopolitics, tariff policies, trade restrictions, or local compliance requirements may increase the costs of overseas business expansion and project delivery.