Shenzhen Newway Photomask Making Co., Ltd.

All figures are in RMB million under PRC Accounting Standards, fiscal years ending 31 December. FY2023–FY2025 are from audited annual reports. FY2021–FY2022 are from the IPO prospectus, the convertible-bond prospectus and the FY2022 annual report.

Income statement

FY2023 pre-tax margin is computed from total profit over revenue. The company paid a cash dividend for FY2023, but the per-share figure is not shown above, so the 0 in the FY2023 dividend column should not be read as "no dividend".

FY2023 expense lines are combined in the published summaries, so the zeros are placeholders, not nil expense. The FY2024 lines are from the FY2024 annual report as reproduced in broker models. FY2024 selling, administrative and R&D expense ratios each fell year on year, by 0.3, 0.5 and 0.9 percentage points respectively.

Revenue CAGR. FY2021–FY2025: 23.7%. FY2023–FY2025: 31.1%. Attributable net profit CAGR, FY2021–FY2025: 48.1%.

Trend commentary. Three phases stand out. FY2021–FY2022 was the margin inflection. Chengdu's G11 and G8.5 lines filled up and fixed costs were spread over more revenue, so net margin rose from 10.6% to 18.7% and profit more than doubled in FY2022. FY2023 was a capacity-constrained pause. Revenue grew only 5.1% because the IPO-funded lines were late. Management said in the convertible-bond application that capacity bottlenecks slowed growth. Mix and cost control still lifted net margin to 22.1%. FY2024–FY2025 was a second ramp. The IPO expansion lines came online at the end of 2024, followed by the convertible-bond lines (two semiconductor and two high-precision FPD lines) in 2025. Revenue grew more than 30% in each year and margins held steady. Profit rose roughly in line with revenue. Gross-margin gains from OLED, G8.6/G11 and IC masks were partly offset by new-line depreciation and yen-driven exchange losses. Q1 2025 finance expense rose RMB 14.8 million year on year on lower yen exchange gains. R&D spending has stayed at about RMB 35–38 million a year, so R&D intensity fell from 5.24% to 3.17% as revenue scaled.

Quarterly progression

Q2 and Q4 figures are computed from half-year, nine-month and full-year totals. Gross margin was 34.1% in Q1 2025, 33.3% in Q2 2025 and 36.4% in Q3 2025. For the first nine months of 2026 it was 36.10%, with a net margin of 22.12%. For 9M 2026, revenue was RMB 974.9 million (+17.89%), attributable net profit RMB 215.7 million (+25.61%), and net profit excluding non-recurring items RMB 201.3 million (+29.38%). Profit growth is outpacing revenue as AMOLED, Micro-LED and IC masks raise the mix. Q3 2026 nonetheless showed the slowest revenue growth since the IPO. Management attributed this to soft panel demand, ultra-large-size (G10.5/G11) orders pulled into earlier periods, and late tool deliveries at Xiamen.

Balance sheet

Liabilities to total assets for FY2023 and FY2024 are computed as total assets less attributable equity, divided by total assets. That method overstates leverage while Chengdu Luwei still had minority shareholders.

The zero entries for FY2023 balance-sheet detail are placeholders, not nil balances. FY2024 detail is from the FY2024 annual report as reproduced in broker models.

At 31 December 2025, the company held RMB 251.0 million of trading financial assets (mostly idle convertible-bond proceeds in wealth-management products), RMB 25.0 million of other equity investments and RMB 67.3 million of non-current assets due within one year. Gross machinery and equipment rose from RMB 1,229 million at 30 September 2025 to RMB 1,321.8 million at 31 December 2025.

Total debt (USD million, PitchBook aggregation of company filings).

Balance-sheet commentary. Total assets fell in FY2024 as IPO cash was spent on equipment and on share buybacks. They then rose 39.4% in FY2025, mainly from the RMB 615 million convertible bond and stronger operating cash. The bond took leverage to 46.8% of assets at end-2025, the highest since listing. The July 2026 placement raised RMB 1,002 million gross and RMB 991.7 million net, so equity at end-2026 should be well above RMB 2.6 billion. That restores balance-sheet capacity for the Xiamen and Luxin phase 2 projects. The convertible bond is the main long-dated liability. Bank loans are mainly short-term working-capital and project facilities. At April 2025, guarantees for subsidiaries totalled RMB 1,243.6 million (approved but unused facilities plus amounts drawn), equal to 83.84% of net assets.

Cash flow

As with DPS, the FY2023 cash dividend amount is not shown above, so the zeros are not "no dividend".

Operating cash flow has run well above net profit, at 1.4 times in both FY2024 and FY2025. Q1 2025 operating cash flow alone rose 295.6% year on year to RMB 104.7 million. Capex has run well ahead of operating cash flow since 2023 because of the Shenzhen and Chengdu expansions, Luxin (RMB 1.4–1.6 billion phase 1) and Xiamen (RMB 1.30 billion phase 1). Free cash flow has therefore been negative at group level, and the gap has been financed with the IPO, the convertible bond and the 2026 placement. Share repurchases left 1,215,090 treasury shares at April 2025 and 833,118 at March 2026.

Ratios

ROE rose 5.9 percentage points over two years on better asset turnover and stable net margins, with little help from leverage until FY2025. The current ratio was 1.40 at end-2024. Interest coverage is high: FY2024 finance expense of RMB 8 million against RMB 217 million of pre-tax profit gives more than 25 times. The low-coupon convertible bond keeps cash interest small.

Management guidance. Management gives qualitative guidance only:

• higher capacity from the convertible-bond lines in Shenzhen and Xiamen;

• Xiamen phase 1 starting up in H2 2026, though tool delays push meaningful revenue toward 2027;

• Luxin phase 1 moving from samples to volume, with 40nm full-set qualification timing uncertain;

• Luxin phase 2 (28–14nm) construction starting in 2026;

• a rising share of high-value FPD masks (OLED, G8.6, G11, Micro-LED) and IC masks.

Consensus expectations. Brokers expect revenue of RMB 1.5–1.6 billion in FY2026 (+31–37%) and RMB 2.0–2.1 billion in FY2027. Net profit expectations are RMB 356–363 million for FY2026 and RMB 520 million for FY2027. The 9M 2026 results (revenue +17.89%) point to FY2026 revenue nearer RMB 1.3–1.35 billion unless Q4 accelerates sharply.

Bull case

1. G8.6 AMOLED volume and pricing. As principal supplier to BOE's Chengdu G8.6 line, with Xiamen adding five AMOLED lines, Newway can take share in China's 62%-of-global FPD mask demand, where mainland vendors supply only 23.8%. High-generation OLED masks carry the highest prices and margins in FPD.

2. Semiconductor rerating. Luxin already ships 28nm single-layer and 90nm full-set masks. If it passes 40nm full-set qualification and executes 28–14nm, Newway gains access to the RMB 10 billion Chinese wafer-mask market.

3. Operating leverage and cash conversion. The FY2025 net margin was 21.8%, ROE 16.5% and operating cash flow 1.4 times net profit. New capacity has historically lifted profit faster than revenue (H1 2026 profit +35.8% on revenue +22.8%).

Bear case

1. Panel-cycle and concentration risk. Q3 2026 growth fell to 8.4%. One customer accounts for 47% of revenue. A pause in that customer's model launches or G8.6 ramp would leave little to absorb the new capacity.

2. Depreciation outrunning revenue. Xiamen (RMB 1.3 billion phase 1), Luxin (RMB 1.4–1.6 billion phase 1) and the convertible-bond lines add large fixed costs, including about RMB 99 million a year from Xiamen alone. Project delays have been common, and slower ramps could compress margins from their 36% gross level.

3. Valuation and dilution. The shares trade at about 50 times trailing earnings and more than 7 times book. Equity is being diluted by about 6% from the placement and up to about 9% from bond conversion. R&D spending is thin (3.2%) for the semiconductor ambitions being priced in.

Key catalysts (next 12 months)

• Xiamen phase 1 tool qualification and first customer shipments — Expected timing: Late 2026 – H1 2027; Why it matters: Validates the growth case for AMOLED capacity

Luxin 40nm full-set customer qualification: Expected timing: Unspecified; Why it matters: First domestic merchant 40nm full set

Luxin phase 2 (28–14nm) tool orders and construction: Expected timing: 2026–2027; Why it matters: Technology roadmap credibility

Further G8.6 AMOLED orders (BOE, Visionox, others): Expected timing: Ongoing; Why it matters: Volume and pricing visibility

FY2026 results and dividend: Expected timing: Apr 2027; Why it matters: Test of the slowdown and of payout policy

Chairman's share purchases and possible buyback: Expected timing: Late 2026 – 2027; Why it matters: Signal of confidence

Convertible-bond conversion trend: Expected timing: Ongoing; Why it matters: Dilution and deleveraging

Monitorables:

• Quarterly gross margin (around 36%) against new depreciation.

• Largest-customer share.

• Semiconductor revenue share.

• Status of tool deliveries under export controls.

• R&D intensity.

• Progress against the 30% payout policy.

Analyst verdict. Newway has built the best high-generation display-mask franchise in China. It is the only mainland G11 producer, holds a quarter of world G11 revenue, and now supplies the first G8.6 AMOLED lines. It has also turned that franchise into a credible start in semiconductors. Revenue more than doubled between FY2021 and FY2025, and attributable profit nearly quintupled. Margins have held at a little over 20% at the net level, and cash flow has covered reported earnings with room to spare. Few Chinese semiconductor materials companies combine scale, profitability and policy relevance this well.

The next two years are about execution more than franchise. Xiamen, Luxin phase 1 and phase 2, and the convertible-bond lines together commit RMB 4–5 billion of capital. That roughly doubles the asset base just as Q3 2026 showed the panel cycle can still bite. The concentration figures stand out: one customer at 47% of revenue and five suppliers at 89% of purchases. In semiconductors, 28nm single-layer shipments are a milestone, but full-set qualification at 40nm and below is the real test. The company's R&D budget, under RMB 40 million a year, is modest for that task.

On about 50 times trailing earnings, the market prices in timely delivery of both the AMOLED and the semiconductor roadmaps. The balance of evidence still favours Newway as a structural winner from Chinese mask localisation, a market where domestic vendors supply less than a quarter of local display demand and a low single-digit share of semiconductor demand. Over the next 12 months, the stock is likely to follow three things: the pace of Xiamen's ramp, Luxin's 40nm qualification, and whether the largest customer's G8.6 orders keep up with Newway's new capacity. Investors should treat the 2026 slowdown as a signal to watch rather than proof that the thesis is broken. Positions should be sized for a capital-intensive, single-country, concentrated-customer business with uneven quarters.