In Q2, the company recorded operating revenue of RMB 2.084 billion (+12.74% YoY, +14.94% QoQ) and net profit attributable to parent of RMB 388 million (+3.82% YoY, +12.46% QoQ), in line with market expectations. Supported by continuous technological breakthroughs in valve products and special‑material solutions, the platform‑based strategy is steadily advancing. The company is expected to maintain solid performance growth; we maintain an “Overweight” rating.
Revenue and Gross Profit Rose in 1H2026; Exchange‑rate Volatility Impacted Period Expenses
In the first half of 2026, operating revenue reached RMB 3.897 billion (+14.47% YoY), with net profit attributable to parent at RMB 733 million (+15.20% YoY). Gross margin stood at 38.12%, up 2.36 percentage points year‑on‑year, driven by an increased proportion of high‑margin downstream businesses.
On the expense side: selling expense ratio 6.57% (+0.19pct YoY); administrative expense ratio 3.33% (−0.58pct YoY); R&D expense ratio 2.79% (+0.07pct YoY); financial expense ratio 3.52% (+4.53pct YoY). The overall rise in period expense ratio was mainly attributable to higher foreign‑exchange losses.
Focus on Industrial Valve Core Business; Multi‑front Breakthroughs in Product & Material Technologies
The company focuses on the R&D, manufacturing and sales of industrial valves, delivering complete working‑condition solutions for global clients. As of 1H2026, its product portfolio covers 11 major valve categories with over 100,000 specifications for diverse harsh service conditions. In‑house R&D platforms and laboratories support continuous self‑owned technology iteration.
In 1H2026, the company achieved key technical milestones including high‑pressure large‑bore top‑mounted cryogenic ball valves, high‑pressure large‑bore V‑port ball valves, prototype of Hualong‑1 Nuclear Class‑1 stop‑check valves, power‑plant safety valves, deep‑water valve actuators, and multi‑well wellhead safety control systems for offshore platforms. Certification systems for industrial materials have been further improved: the forging plant completed recertification and scope expansion for TGP‑HT and TGP‑NDT; the casting facility obtained special certification for deep‑water‑equipment castings. Multiple breakthroughs were realized in special materials and process optimization.
Layout Across Diverse Emerging Segments: Rising Technical & Brand Value
Business segments span oil & gas, chemical, offshore engineering, hydrogen energy, energy storage, carbon capture and new‑energy industries, providing full‑series industrial‑valve solutions. In 1H2026, iteration of high‑end products accelerated; multiple prototypes for nuclear‑power, offshore and cryogenic critical valves were completed, demonstrating advancing high‑end and import‑substitution capabilities.
Equity Incentive Plan Aligns Core Team and Demonstrates Confidence in Future Growth
In July 2026, the company launched a restricted‑stock incentive plan. A total of 4.99 million restricted shares are proposed to be granted to 188 participants, including senior management, middle‑level managers and key technical personnel. Taking 2025 net profit attributable to parent as the base, the plan sets minimum annual growth targets of 10% / 21% / 33% for 2026‑2028 respectively.
The incentive closely aligns interests of core staff, and performance targets reflect management’s confidence in future operations. With an expanding product portfolio and deeper penetration in high‑end and emerging sectors, value from the platform‑driven model is expected to keep unlocking, supporting favorable long‑term growth prospects.
Earnings Forecast & Valuation
We maintain net‑profit‑attributable‑to‑parent forecasts of RMB 1.944 billion / 2.310 billion / 2.634 billion for 2026‑2028, corresponding to EPS of RMB 2.51 / 2.98 / 3.40. Peers trade at an average 26x 2026E PE. Based on peer valuation comparison, we assign a 26x 2026E PE, lowering target price to RMB 64.20 (previous: RMB 67.77, based on prior 27x 2026E PE).
Risk Warnings: intensifying industry competition; volatility in exchange rates and ocean‑freight costs; cyclical demand swings in petrochemical sector; slower‑than‑expected expansion of emerging businesses.
The 9th China Valve City · Longwan International Valve Exhibition
Wenzhou Valve Show 2027 — The 9th China Valve City · Longwan International Valve Exhibition.
Gathering cutting‑edge intelligent manufacturing of the whole industrial chain and connecting high‑quality buyers and suppliers worldwide.
Discover domestic and international valve brands under one roof, conduct face‑to‑face discussions on technical cooperation and procurement matchmaking.
Date: March 12‑14, 2027
Venue: Wenzhou International Convention and Exhibition Center
Leave us a message for booth reservation and visitor registration.
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