Analysis of Investment Opportunities and Evolution of Valuation Logic in China's Commercial Aerospace Primary Market

China’s commercial aerospace entered its first year of development in 2015, when the National Medium- and Long-Term Development Plan for Civil Space Infrastructure (2015–2025) provided systematic support for social capital to participate in civil space infrastructure construction in a top-level plan for the first time [1]. After a decade of development, the industry has completed institutional groundwork from “breaking the ice” to “taking shape”. Both the 2024 and 2025 Government Work Reports clearly proposed “promoting the development of commercial aerospace industrial clusters”, marking the official transition of commercial aerospace from a nurtured industry to a key strategic emerging industry [1].

The most direct institutional breakthrough affecting the primary market is the Guidelines for Commercial Rocket Enterprises to Apply for the 5th Listing Standard of the STAR Market issued at the end of 2025. This guideline provides detailed specifications for commercial rocket enterprises to apply for the STAR Market’s 5th listing standard for the first time, opening up domestic capital market access for commercial aerospace enterprises that are still in a critical growth stage and have not yet achieved profitability [2]. This institutional arrangement has significantly improved the long-term capital expectations of commercial aerospace projects, allowing the market to carry out early capital layout based on evaluations of technological potential and strategic value [1].

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Currently, investment targets in the primary market show a clear trend of convergence, with leading enterprises becoming the core targets for capital layout. According to public statistics, total financing in the commercial aerospace sector reached RMB 18.6 billion in 2025, a year-on-year increase of 32%; there were 67 financing deals in total, with rocket manufacturing and satellite applications being the main capital-absorbing segments [1]. The financing status of major leading enterprises is as follows:

Company	Latest Financing Status	Investor Characteristics
Tianbing Technology	Completed nearly RMB 2.5 billion Pre-Series D and Series D financing in October 2025	Guoyu Gaohua, Jinan Iron and Steel Group, China Orient Asset Management, Shenwan Investment, BOC Assets, etc. [3]
Galactic Energy	Completed RMB 2.4 billion Series D financing	Beijing Commercial Aerospace and Low-Altitude Economy Industry Investment Fund, Nanjing Innovation Investment Group, Sichuan Manufacturing Industry Collaborative Fund, etc. [3]
LandSpace	Completed over 10 rounds of financing in total, received RMB 900 million investment from the National Manufacturing Transformation and Upgrade Fund in December 2024	Sequoia China, Country Garden Ventures, Matrix Partners China, National Team, etc. [3]
i-Space	First tranche of Series D+ financing amounts to RMB 700 million	Chengdu Advanced Capital, Chengdu Airport Innovation and Entrepreneurship Investment, etc. [3]

: Currently, the bottleneck restricting China’s commercial aerospace is not downstream applications, but upstream infrastructure—inadequate rocket carrying capacity and high launch costs. Breakthroughs in reusable rocket technology will become a key high ground for industry competition [4].

: Rocket body structures and engine components account for more than 30% of the total rocket cost; as launch volumes increase, related demand shows an “amplification effect” [5]. Low-Earth orbit (LEO) constellations are not only “capable of networking”, but also “capable of computing, sensing, and management”. New applications centered on remote sensing data, spatio-temporal big data, and space computing centers are attracting a new wave of entrepreneurs and capital [5].

Current investments in commercial aerospace show a clear characteristic of “state-owned capital dominance”. As of October 2025, 15 provinces have issued special commercial aerospace policies, and 20 aerospace funds have a total scale of over RMB 480 billion [6]. The main capital sources include:

• National and Local Guidance Funds
  : National Venture Capital Guidance Fund, National Manufacturing Transformation and Upgrade Fund, Guangzhou Industrial Investment Fund, Guiyang Industrial Development Fund, etc. [1][3]
• Industrial Funds
  : Beijing Commercial Aerospace and Low-Altitude Economy Industry Investment Fund, Nanjing Innovation Investment Group, Sichuan Manufacturing Industry Collaborative Fund, etc. [3]
• Market-oriented VC/PE
  : Sequoia China, Matrix Partners China, Cornerstone Capital, Country Garden Ventures, Amber Hill Capital, etc. [3]
• State-owned Background Institutions
  : National Fund for the Development of Small and Medium-sized Enterprises, National Military-Civilian Integration Industry Investment Fund, CAS Investment Management Co., Ltd., China Orient Asset Management, etc. [3]

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The valuation logic of commercial aerospace is undergoing profound changes. Early investments were mainly based on technological potential and conceptual expectations, and now it has gradually shifted to a comprehensive valuation system of “Technology + Orders + IPO Expectations”. Tang Jincao, Chairman of Shuimu Capital, analyzed that in 2025, the primary market’s attention to commercial aerospace has significantly increased, and the industry is shifting from the early “spontaneous exploration” phase to a clearer “national systematic guidance” phase [1].

Leading complete rocket and complete satellite enterprises had valuations of only a few billion yuan a few years ago, but now they generally have valuations ranging from RMB 15 billion to RMB 20 billion, with expected market capitalizations directly discussed at the “hundreds of billions of yuan level” after listing [5]. Taking AVIC Heavy Machinery as an example, as of January 5, 2026, the company’s price-to-earnings ratio (PE-TTM) was 127.6, ranking at the 99.72th percentile of its nearly 3-year historical range; its price-to-sales ratio (PS-TTM) was 3.045, reaching the 71.59th percentile of its historical range [7].

Referring to supply chain companies like Rocket Lab listed on U.S. stock markets, aerospace revenue can enjoy a PE valuation of 45-60 times [7]. As the gross profit margin of commercial aerospace forgings is 8-10 percentage points higher than that of traditional aerospace forgings, batch delivery of orders will significantly increase profits, providing support for valuations [7].

Capital shows a trend of concentrating on leading and hard tech projects, leading to intensified valuation differentiation among projects. Some key subsystem enterprises had valuations of only 1-2 times at the beginning of this year, but their valuations have doubled after several rounds of financing and support from local funds [5]. This differentiation reflects the market’s re-pricing of core technological barriers and commercialization certainty.

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Changes in the secondary share transfer market have been particularly evident over the past year. Ding Yiting, Partner of Tsinghua Alumni Seed Fund, stated: “Taking Tianbing Technology as an example, the company has conducted secondary share transfers before, but institutions were generally cautious when the overall market was cold in the previous two years. Starting from the second half of 2025, the demand to take over secondary shares has obviously increased, and many institutions have begun to actively seek entry opportunities” [1].

• Clarified Market Cognition
  : The market’s understanding of leading commercial aerospace enterprises has gradually become clearer, with investment targets further converging [1]
• Emerging Commercialization Progress
  : As commercialization progress of some projects emerges, the risk appetite of capital providers has recovered [1]
• Improved Policy Expectations
  : The issuance of the guidelines for the STAR Market’s 5th listing standard has significantly improved long-term capital expectations [1]
• Active Participation of State-owned Capital
  : Government funds in multiple regions have taken the initiative to engage, and secondary shares of leading projects have become the focus of capital competition, with existing shares being quickly absorbed [1]

Looking ahead to 2026, secondary shares may be “snapped up”. As multiple leading enterprises complete their IPOs, the “Technology - Orders - IPO - Reinvestment” path will be opened up, and exit channels in the private equity secondary market and regional equity markets will be expanded simultaneously [1].

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At least 10 commercial aerospace enterprises have launched their IPO processes, among which 5 enterprises including LandSpace, i-Space, CAS Space, Galactic Energy, and Tianbing Technology focus their main business on the carrier rocket sector [1]. On December 31, 2025, LandSpace’s IPO application on the STAR Market was accepted by the Shanghai Stock Exchange, with a planned fundraising amount of RMB 5.5 billion [1]. All the above IPO-bound enterprises were established between 2015 and 2019, which was a golden window period when national policies encouraged private enterprises to develop commercial aerospace [1].

• STAR Market’s 5th Listing Standard
  : Provides domestic listing access for unprofitable commercial aerospace enterprises with core technologies [2]
• Pre-IPO Round Layout
  : The number of participating institutions has increased significantly, with directly taking over secondary shares and investing in Pre-IPO rounds becoming the main participation methods [1]
• Secondary Market Exit
  : Once the first batch of commercial aerospace hard tech companies list on the STAR Market, it will mean the completion of a full capital cycle from angel investment, VC, PE to the primary and secondary markets [5]

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Tang Jincao, Chairman of Shuimu Capital, made the following predictions for commercial aerospace investment in 2026 [1][2]:

Dimension	Strategy Direction
Fundraising	Benefiting from the continuous leverage of the National Venture Capital Guidance Fund and the expansion of the STAR Market’s 5th listing standard, fundraising is expected to increase year-on-year, with further improvement in social capital participation
Investment	Focus on key links such as reusable rockets and satellite payloads; increase the proportion of “early-stage and small-scale investments”, with single-investment amounts becoming more rational
Management	Strengthen penetrating supervision and post-investment empowerment, and establish a performance assessment system adapted to sci-tech innovation
Exit	Multiple leading enterprises will complete their IPOs, opening up the “Technology - Orders - IPO - Reinvestment” cycle

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1. Commercialization Progress Risk
   : Compared to the boom in financing, the commercialization of commercial aerospace is still in a very early stage [6]
2. Valuation Correction Risk
   : The current price-to-earnings ratio is at a nearly 3-year peak; if short-term performance fails to match high growth rates, a valuation correction may occur [7]
3. Technology Risk
   : Reusable rocket technology is still in an intensive R&D stage, with uncertainties in technical routes
4. Increased Competition Risk
   : The industry has entered a stage of in-depth restructuring, and subsequent queuing enterprises may face more fierce competition [1]

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China’s commercial aerospace primary market is undergoing a profound transformation from “spontaneous exploration” to “national systematic guidance”. The implementation of the STAR Market’s 5th listing standard has opened up a long-term domestic capital market channel for the industry; total financing in 2025 increased by 32% year-on-year to RMB 18.6 billion, showing that capital continues to be optimistic about this strategic emerging industry. The valuation logic has shifted from pure technology-driven to a comprehensive evaluation system of “Technology + Orders + IPO Expectations”, with leading enterprises generally achieving valuations of over RMB 10 billion. As the IPO process accelerates, the industry is about to complete the full capital cycle of “Technology - Orders - IPO - Reinvestment”. For investors, focusing on key links such as reusable rockets and satellite payloads, and seeking targets with core technological barriers and commercialization certainty amid valuation differentiation will be a rational choice in 2026.

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[1] 21st Century Business Herald - 2026 Outlook for Commercial Aerospace: Secondary Shares May Be “Snapped Up”, Reusable Rockets Enter “Intensive R&D Stage” (https://www.21jingji.com/article/20260103/herald/c4c19b48372d9b27e9d9bd5dfeae9533.html)

[2] STAR Market Daily - Commercial Aerospace Enters In-depth Restructuring Stage (https://tech.sina.cn/2026-01-05/detail-inhffwpq6795789.d.html)

[3] Pedaily - Commercial Aerospace Investors Are About to Cash Out (https://news.pedaily.cn/202512/559369.shtml)

[4] Securities Times - Reusable Rocket Race, IPO Feast Begins: 2025, Commercial Aerospace Enters a New Era (https://www.stcn.com/article/detail/3565344.html)

[5] Pinecone Finance - Commercial Aerospace with Full-Screen Limit-Ups, a Wilder New Year’s Theme Than GPUs? (https://www.eet-china.com/mp/a462468.html)

[6] Tencent News - LandSpace’s IPO, Outcompeting SpaceX (https://news.qq.com/rain/a/20260105A04MQM00)

[7] Eastmoney - The Rapid Growth of AVIC Heavy Machinery’s Commercial Aerospace Orders Has Affected Its Valuation Level (https://emcreative.eastmoney.com/app_fortune/article/index.html?artCode=20260105222427676358610)