Analysis Report on Military Order Growth and Valuation Recovery of China Spacesat (600118.SH)

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China Spacesat Co.,Ltd. is the

, and belongs to the Aerospace & Defense sector in the A-share market. The company’s main business covers satellite manufacturing, satellite launch services, satellite applications and other fields, and it is a core participant in China’s satellite internet construction.

From the perspective of market performance, the company’s stock price has experienced a sharp rise recently. As of the close on January 7, 2026, the company’s stock price closed at

(equivalent to approximately RMB 730), with a total market capitalization reaching [0].

Statistical Period	Price Change	Remarks
1-Day	-6.34%	Short-term pullback
5-Day	-0.76%	Volatile adjustment
1-Month	+107.47%	Short-term surge
3-Month	+168.79%	Trend-based rise
6-Month	+256.06%	Mid-term strength
1-Year	+281.83%	Annual top-performing stock
3-Year	+356.01%	Long-term strength

The investment value of China Spacesat mainly relies on the following three major industrial trends:

• Plans to launch approximately
  13,000 satellites
  , with the constellation scheduled to be completed by 2030
• China Spacesat undertakes
  50%-60% of the satellite R&D and manufacturing share
  , holding an absolute leading position in the industry
• 28 satellites were delivered in 2025, with
  540-720 satellites
  scheduled for delivery in 2026 [1][2]

• Won the bid for the third batch of 12 satellite orders, with a contract value exceeding
  RMB 320 million
• Plans to deliver 30-50 satellites in 2026, with supporting component orders exceeding
  250 sets
  [1]

• Asia’s largest satellite manufacturing base, officially commissioned by the end of 2025
• Production capacity increased from the original 200-300 satellites/year to
  1,500 satellites/year
  [1][2]

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According to public market information, China Spacesat’s current order backlog is at a historical high:

Orders in hand exceed , scheduled for production through [1]

Order Type	Scale/Amount	Planned Delivery in 2026	Gross Profit Margin
GW Constellation	Approximately 50% share	540-720 satellites	45%-55%
Qianfan Constellation	12 satellites + 250 sets of components	30-50 satellites	Higher than traditional business
Military Satellites	RMB 120 million	Delivery in Q4	Traditional level
New Energy Supporting	RMB 290 million	2025-2026	Energy storage business

• 2025Q3:
  Net profit of RMB 45.3 million, a year-on-year increase of 294.92%, marking the first realization of order delivery and turning losses into profits
• 2025Q4:
  Acceptance of the RMB 120 million military order, with full-year net profit exceeding RMB 47 million
• 2026Q1:
  Delivery of the first batch of satellites for China Satellite Network Group, with operating revenue of RMB 1.5-1.8 billion
• 2026Q4:
  Annual delivery peak, with operating revenue of RMB 2.5-2.8 billion, accounting for 40% of the full-year total
• 2027:
  Expected operating revenue of RMB 7.8-8.8 billion [1]

The commissioning of the Hainan Satellite Super Factory marks a qualitative leap in China Spacesat’s manufacturing capability:

Phase	Production Capacity (Satellites/Year)	Actual Deliveries (Satellites)	Capacity Utilization Rate
2025	150	90-120	15%
2026	900	540-720	72%-87%
2027	1,500	900-1,200	Nearly 100%

Large-scale production has reduced the cost per satellite by , and the gross profit margin is expected to increase from in the first three quarters of 2025 to in 2027 [1][2]

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From the perspective of traditional valuation, China Spacesat’s valuation level is in an extremely high range:

Valuation Indicator	Value	Industry Comparison
Price-to-Earnings Ratio (P/E)	2062-2505x	Significantly high
Price-to-Book Ratio (P/B)	18.66x	Relatively high
Price-to-Sales Ratio (P/S)	18.00x	Relatively high
ROE (Return on Equity)	0.91%	Extremely low
Net Profit Margin	0.87%	Extremely low
Operating Profit Margin	-0.91%	Loss-making status

From the perspective of financial health assessment, the company has

and maintains a neutral financial stance [0].

Valuation calculation using the Discounted Cash Flow (DCF) model shows a

between the current stock price and intrinsic value:

Valuation Scenario	Intrinsic Value	Deviation from Current Stock Price
Conservative Scenario	$6.83	-93.2%
Baseline Scenario	$8.05	-92.0%
Optimistic Scenario	$10.30	-89.7%
Weighted Average	$8.39	-91.6%

Parameter	Conservative Scenario	Baseline Scenario	Optimistic Scenario
Revenue Growth Rate	0%	-7.4%	0%
EBITDA Margin	5.0%	5.3%	5.6%
Terminal Growth Rate	2.0%	2.5%	3.0%
Cost of Equity	10.6%	9.1%	7.6%
Cost of Debt	4.3%	3.3%	2.3%
WACC	9.1%	9.1%	9.1%

DCF analysis shows that even under the most optimistic assumptions, the company’s reasonable valuation is only in the range of

, representing a from the current stock price of $100 [0].

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Assuming China Spacesat can complete deliveries fully in accordance with market expectations:

Forecast Source	2026 Operating Revenue Forecast	Year-on-Year Growth	Net Profit Forecast
Brokerage Optimistic Forecast	RMB 6.5-7.2 billion	+15%-25%	Over RMB 116 million
DCF Baseline Assumption	Approximately RMB 4 billion	Flat	Approximately RMB 50 million

1. GW Constellation delivers 540-720 satellites as scheduled
2. Value per satellite is RMB 80-120 million
3. Gross profit margin increases to around 15%
4. Expense ratio remains stable

From the perspective of the divergence between stock price growth and fundamentals:

• The stock price has risen by
  256%
  in the past 6 months, while operating revenue only increased by approximately 85% during the same period
• The P/E ratio has risen from approximately 100x to over 2500x
• The expectations implied by the current stock price have exceeded any reasonable performance growth path

Liu Zhongyu, Chief Analyst of Military Machinery at CICC, pointed out: “

” [3].

The core logic of this view is:

• The satellite industry is in a transition period from “technological exploration” to “large-scale development”
• Traditional valuation methods may not be applicable to the current stage
• Sustained high-speed growth is required to digest the current high valuation

Financial Indicator	Current Level	Improvement Target	Gap
Gross Profit Margin	9.62%	15%+	+5.38pp
Net Profit Margin	0.87%	5%+	+4.13pp
ROE	0.91%	10%+	+9.09pp

Looking at historical data, although the company’s profitability improved in the first three quarters of 2025, there is still a huge gap between the current profitability level and that required to support the current valuation [0][2].

Driver	Expected Effect	Time Window
Improvement in Capacity Utilization of Hainan Factory	Cost reduction, profit expansion	Full year of 2026
Increase in Proportion of High-Gross-Profit Constellation Orders	Gross profit margin improvement	2026-2027
Emergence of Scale Effects	Expense ratio reduction	2026-2027
Continuous Order Landing	Certainty of revenue growth	Ongoing

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According to the latest technical analysis data [0]:

Indicator	Value	Signal Interpretation
MACD	No death cross	Uptrend not completely broken
KDJ	K:89.8, D:90.7, J:88.0	Overbought zone, risk of death cross
RSI	Overbought	Risk zone
20-Day Moving Average	$69.96	Short-term support level
50-Day Moving Average	$53.97	Mid-term trend support
Beta	0.66	Low correlation with the broader market
Trend Judgment	Sideways consolidation	No clear direction

• Support Level: $69.96 (20-Day Moving Average)
• Resistance Level: $103.46

From the market perspective, the satellite industry as a whole has been continuously sought after by capital:

• The Satellite Industry ETF (159218) has seen capital inflows of nearly
  RMB 800 million
  in the past five days
• Share increase of
  100%
  in the past ten days
• The CSI Satellite Index rose by nearly
  80%
  in 2025 [3]

However, it is worth noting that the ETF pulled back on January 7, 2026, with capital showing characteristics of

.

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Risk Type	Specific Description	Impact Level
Delivery Delay Risk	Satellite manufacturing involves complex supply chains, which may lead to delivery delays	Medium
Technical Risk	Low-orbit satellite networking technology is still in the verification stage	Medium
Competition Risk	Qianfan Constellation may divert order share from GW Constellation	Low
Price Risk	The price per satellite may decline in the later stage of constellation construction	Medium

• The current stock price has fully reflected optimistic expectations for the next 2-3 years
• Any reduction in orders, delivery delays, or lower-than-expected gross profit margin may lead to a sharp pullback in the stock price

• Average daily turnover of approximately RMB 8.7 billion in the past 3 months, with high turnover rate
• Once market sentiment shifts, there may be insufficient liquidity to absorb selling pressure

• The military industry sector is greatly affected by policies
• Factors such as China-US relations and geopolitics may affect market risk appetite

Risk Indicator	Current Status	Warning Level
Cash Flow	Negative operating cash flow	Yellow Warning
Profitability	Net profit margin less than 1%	Yellow Warning
Valuation Level	PE>2000x	Red Warning

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Evaluation Dimension	Rating	Description
Order Certainty	★★★★☆	Orders in hand exceed RMB 30 billion, scheduled for production through 2027
Capacity Support	★★★★★	Hainan Factory commissioned, production capacity increased by more than 3 times
Profitability	★★☆☆☆	Current profitability is extremely weak, ROE less than 1%
Valuation Rationality	★☆☆☆☆	Stock price is over 90% higher than DCF intrinsic value
Technical Aspects	★★★☆☆	Overbought zone, with adjustment pressure

1. Order growth is real, but has been fully priced in
   • Orders in hand exceeding RMB 30 billion are indeed positive
   • However, the current stock price has fully or even over-reflected this expectation
   • The stock price is over 90% higher than the DCF intrinsic value

2. Valuation recovery requires more time and stronger performance realization
   • Even if operating revenue reaches RMB 6.5-7.2 billion in 2026, the P/E ratio calculated based on the current stock price will still exceed 100x
   • Net profit needs to reach over RMB 1 billion to support the current valuation (calculated at 30x P/E)
   • This requires the gross profit margin to increase from 9.62% to over 20%, which is quite difficult

3. Short-term risks outweigh opportunities
   • Technical indicators show overbought status
   • 1-day drop of over 6%, market sentiment has shown divergence
   • The degree of divergence between valuation and fundamentals is also at an extreme level in the A-share market

Investor Type	Strategic Recommendation	Reason
Short-Term Trader	Avoid	Extremely high valuation risk, violent fluctuations
Medium-Term Investor	Wait and See	Wait for valuation regression or performance verification
Long-Term Investor	Wait	Current price lacks a margin of safety
Risk Preferencer	Small Position	Only for extremely small position theme speculation

• Participate in industry beta through the Satellite Industry ETF (159518) to reduce individual stock risk
• Wait for the stock price to pull back to the RMB 50-60 range before considering entry
• Focus on the actual performance realization in the 2026 Q1 report and interim report

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[0] Jinling AI Brokerage API Data - Company Overview, Financial Analysis, DCF Valuation, Technical Analysis, Real-time Market Quotes

[1] Eastmoney - “China Spacesat has over RMB 30 billion in orders in hand, scheduled through 2027, 2026 is a big year for mass deliveries” (https://caifuhao.eastmoney.com/news/20260102110431488238260)

[2] Zhihu Column - “Panoramic Analysis of Investment Opportunities from Thousand-Satellite Manufacturing to Commercial Aerospace” (https://zhuanlan.zhihu.com/p/1982379144554759175)

[3] Sina Finance - “Has the Satellite Industry Overextended Valuation? CICC Chief Liu Zhongyu: In the accelerated growth period, performance realization is expected to digest valuation” (https://finance.sina.com.cn/roll/2026-01-07/doc-inhfmycs5210314.shtml)

[4] Huxiu - “Space Enclosure: Certain Opportunities in the Sino-US 10,000-Satellite Race” (https://pro.huxiu.com/article/4816701.html)

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This report is for reference only and does not constitute investment advice. Investors should make independent judgments and prudent decisions based on their own risk tolerance.