In-depth Analysis of Zhousheng Micro's Satellite Communication Business Expansion and Its Impact on Valuation and Profitability

According to the latest data, Zhousheng Micro (300782.SZ) currently has a market capitalization of approximately $41.34 billion and a share price of $77.27. However, the company faces recent profit pressure: its latest quarterly EPS for 2025 was -$0.04, with a net profit margin of -5%[0]. From a DCF valuation analysis perspective, the company’s current share price of $77.25 is relatively reasonable; under a neutral scenario, the fair value is $92.45, leaving significant upside potential[0].

• Price-to-Earnings Ratio (P/E): -212.71x (indicating current negative earnings)
• Price-to-Book Ratio (P/B): 4.13x
• Current Ratio: 1.94, indicating good short-term solvency
• Quick Ratio: 0.88, indicating moderate asset liquidity[0]

Zhousheng Micro’s technological breakthroughs in the satellite communication field have important strategic value:

• NTN Standard Product Launch
  : The company has developed RF front-end chip products compliant with NTN (Non-Terrestrial Network) standards and is in the small-scale shipment phase[1]
• Multi-scenario Adaptation Capability
  : RF front-end chip products can adapt to multiple fields such as satellite communication, and have comprehensive capabilities to provide satellite terminal products, applications, and solutions[1]
• Starlink Access Certification
  : Has become one of the suppliers for smart terminals to access commercial networks like Starlink[1]

According to web search data, from 2023 to 2030, the demand for direct-to-satellite mobile phones in the mass market alone will reach $67 billion. Additionally, there are broad application prospects in emergency rescue communication, communication for overseas industrial and commercial institutions, shipborne and airborne communication, etc.[2]

Currently, there are three main technical paths for direct-to-satellite mobile phones[2]:

1. Custom mobile direct connection (modify mobile phones without changing satellites)
2. Existing terminal access (direct connection for 4G/5G existing mobile phones)
3. 3GPP NTN technology (standardized solution)

Zhousheng Micro has chosen the 3GPP NTN technical path, which is the most promising direction for scale and standardization.

• The global market size in 2024 is approximately $18.95 billion, and it is expected to reach $29.6 billion by 2029 with a CAGR of 9.3%[3]
• The Chinese market size in 2024 is approximately RMB33.6 billion, and it is expected to reach RMB53 billion by 2029 with a CAGR of 12.1%[3]

The application of RF front-end chips in the satellite communication field is growing rapidly, especially in the following directions:

• NTN Chip Market
  : 3GPP R17 has integrated NTN into the 5G system, and R18/R19 will expand to broadband services[2]
• Direct-to-Satellite Mobile Phones
  : Starlink launched 350 direct-to-satellite mobile satellites in 2024 and is expected to double that number by mid-2025[2]
• Vehicle-mounted Satellite Communication
  : Has become a standard feature of smart cars, spurring significant demand for RF front-ends[1]

Satellite communication mainly uses the following frequency bands[2]:

• L-band (1-2 GHz): Satellite phones, aviation communication
• S-band (2-4 GHz): Aerospace communication, satellite phones
• Ka-band (17.7-30 GHz): High-speed broadband services

The integration level of RF front-end modules continues to increase, developing from discrete devices to highly integrated modules, which places higher requirements on Zhousheng Micro’s technical capabilities[3].

• The satellite communication terminal equipment market is expected to see explosive growth in the next 5 years
• Direct-to-satellite mobile phone functions are spreading from high-end models to mid-range models
• Vehicle-mounted satellite communication has become a new standard feature for smart cars[1]

Currently, the company’s top five customers have a high concentration rate (82.12%), and the expansion of satellite communication business will help:

• Expand new customer groups and reduce customer concentration risks
• Increase market share in high-value fields such as government and military
• Establish more stable long-term cooperative relationships[0]

Compared with traditional applications, satellite communication RF front-end chips have:

• Higher technical barriers and certification requirements
• Stronger pricing power
• More stable market demand

With the increase in shipment volume of NTN standard products, the company’s:

• R&D amortization costs will gradually decrease
• Manufacturing costs are expected to decrease through large-scale production
• Supply chain bargaining power will be enhanced

Based on the current DCF analysis, the company’s fair value can reach $264.88 under an optimistic scenario, which is a 242.9% upside potential compared to the current share price[0]. The rapid growth of satellite communication business may become an important catalyst for the company to enter the optimistic scenario:

• Current baseline assumption: 12.6% annual revenue growth rate
• Contribution from satellite communication business: May increase the overall revenue growth rate to over 30%
• Long-term sustainability: As an emerging application, satellite communication has a longer growth cycle

• Current baseline EBITDA margin: 34.7%
• Satellite communication business: Higher technical barriers may drive the overall margin to 36-40%

• Standard Evolution Risk
  : The 3GPP NTN standard is still evolving rapidly, requiring continuous follow-up on technical changes
• High Certification Threshold
  : Product certification in the satellite communication field has a long cycle and strict requirements
• Rapid Technological Iteration
  : RF technology is updating faster, requiring continuous high R&D investment

• Monopoly by International Giants
  : International manufacturers such as Skyworks and Qorvo still dominate the RF front-end field
• Intensified Domestic Competition
  : Domestic manufacturers such as Witek and Unisoc are also actively deploying in related fields
• Price Competition Pressure
  : As the market matures, price competition may intensify

• High R&D Investment
  : Satellite communication-related products require large upfront R&D investment
• Long Profit Cycle
  : New businesses take a long time from investment to profitability
• Cash Flow Pressure
  : The company’s current free cash flow is negative[0], so financial stability needs attention

Zhousheng Micro’s business expansion in the satellite communication field has the following core investment values:

1. First-mover Advantage
   : As one of the few domestic companies with NTN standard product capabilities, it enjoys technical and market first-mover advantages
2. Huge Market Space
   : The satellite communication RF front-end market is on the eve of an explosion with huge growth potential
3. Strong Policy Support
   : National policy support for the satellite internet industry provides a good development environment for related enterprises

Based on the growth potential of the satellite communication business, the company’s valuation reassessment expectations are mainly reflected in:

• Revenue Growth Rate
  : Expected to increase from the current 12.6% to 25-30%
• Profit Margin Improvement
  : EBITDA margin is expected to increase from 34.7% to 38-40%
• Long-term Value
  : Under an optimistic scenario, the company’s share price is expected to reach $264.88

• Pay attention to the shipment growth of NTN standard products
• Monitor the company’s progress in obtaining orders for projects such as Starlink
• Track the improvement of gross margin and operational efficiency

• The revenue share of satellite communication business is expected to reach 20-30%
• The company is expected to become a leader in the domestic satellite communication RF front-end field
• Long-term valuation levels are expected to approach those of international leading companies

• Changes in technical standards may lead to product route adjustments
• Intensified market competition may affect profitability
• R&D investment and commercialization cycles may be longer than expected

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