In-Depth Analysis of Commercial Space Transformation of China Spacesat (600118)

I will now provide you with an in-depth analysis report on the commercial space transformation of China Spacesat.

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China Spacesat Co.,Ltd. is the core listed platform under the Fifth Academy of China Aerospace Science and Technology Corporation. As an absolute leader in the domestic satellite manufacturing field, the company has a domestic market share of about 60% in the research and development of small and micro-satellites, with a significant monopolistic position[1]. The company is a core supplier of the GW Constellation (Satellite Network Project), undertaking 50%-60% of the satellite orders for this project. It plans to deliver 100-120 satellites in 2025, corresponding to an expected revenue of RMB 12-14.4 billion[2].

Indicator	Value	Industry Comparison
Gross Profit Margin	9.62%	Industry average 27.92%, significant gap
Net Profit Margin	0.48%	Near break-even
ROE	0.23%	Significantly lower than industry level
Revenue	RMB 3.102 billion	85.28% year-on-year growth
Net Profit Attributable to Shareholders	RMB 14.8114 million	Just returned to profit from loss

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China Spacesat’s gross profit margin dropped from about 14% in 2023 to 9.62% in the first three quarters of 2025, a trend that reflects the deep-seated challenges the company faces in the process of commercial space transformation[1].

The company clearly stated that the delivery volume of aerospace components increased significantly in the first half of 2025, but

, resulting in minimal contribution of incremental revenue to profits[3]. This indicates that although the company has achieved revenue expansion in the commercial space field, the product added value has not increased synchronously.

Traditional aerospace business takes the government as the main customer, with relatively stable procurement pricing. However, with the opening up of the commercial space market, more and more enterprises have entered the aerospace manufacturing and satellite application fields, making competitive procurement the norm[3]. New entrants have strong competitiveness in terms of cost and efficiency, forcing China Spacesat to offer price concessions in competition.

Although the company has reduced the cost per satellite to the ten-million-yuan level through large-scale production, enhancing its market competitiveness, large-scale production is often accompanied by compressed gross profit margins[4]. Especially in the commercial space market, customers are more price-sensitive, and large-scale production must come at the cost of sacrificing part of the profit margin.

The company’s satellite application business mainly includes the manufacturing of communication, navigation and remote sensing terminals, the high-end expansion of Beidou terminals, and system integration projects. However, affected by factors such as some products being in the transition period of upgrading and intense market competition, the operating conditions of several subsidiaries have not improved significantly[3].

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China Spacesat’s customers are mainly concentrated in the government and state-owned enterprises. This customer structure makes the company’s performance greatly affected by adjustments to customers’ demand plans[1]. When the procurement pricing policies and specific procurement strategies of major users are adjusted, the company’s operating performance will be directly impacted.

Most of the aerospace manufacturing and satellite application businesses recognize revenue using the over-time method based on the performance progress milestones of projects. There are significant fluctuations in project concentration and performance progress between quarters[3]. In 2024, the company encountered a revenue low point, directly leading to an annual loss of about RMB 30 million. This revenue recognition mechanism makes it difficult for the company to maintain a stable profit level.

The rapid rise of the aerospace industry at home and abroad, especially commercial space, has brought a new competitive landscape. New concepts and models emerge frequently, and the market landscape faced by the company’s aerospace manufacturing and satellite application businesses is more complex[3]. Competition comes not only from traditional aerospace enterprises but also from emerging commercial space companies, which often have advantages in cost control and operational efficiency.

In the first three quarters of 2025, the company’s revenue increased by 85.28% year-on-year, but the non-recurring profit and loss deducted net profit in the first three quarters was only RMB 5.4712 million, and the net profit margin attributable to shareholders was only 0.48%[3]. This dilemma of “growing revenue without growing profit” indicates that the company has not yet found an effective path to maintain profitability while expanding market scale.

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Despite facing numerous challenges, the company still showed some positive development momentum in 2025:

Driving Factor	Specific Performance
Satellite Network Project Constellation Deployment	Entered the intensive constellation deployment and launch phase in 2025, with batch orders released centrally[1]
Low-Orbit Constellation Orders	Growth in whole-satellite business orders, increased delivery volume of communication, navigation and remote sensing terminals[1]
Beidou Terminal Expansion	Won civil aviation projects, achieved breakthroughs in high-end expansion[1]
Capacity Expansion	Wenchang Super Factory put into operation, annual capacity will be increased to 1,000 satellites/year[2]

The company expects its revenue to reach RMB 7 billion in 2026. With the emergence of scale effects and the increase in the proportion of high-margin whole-satellite business, profitability is expected to gradually improve[2].

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• Current Stock Price: USD 100.23 (approx. RMB 70)
• Trading Range: USD 69.96 (support level) — USD 103.46 (resistance level)
• Technical Indicators: KDJ shows overbought risk, MACD shows neutral signal
• Valuation Level: P/E 2062x, P/B 18.66x, in the historical high range

1. Risk of continued pressure on gross profit margin
2. Risk of high customer concentration
3. Risk of valuation bubble burst (stock price has increased by over 280% within the year)
4. Risk of intensified industry competition

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China Spacesat’s commercial space transformation is in a critical stage. Although the company has shown leading advantages in market position and order acquisition, the fact that its gross profit margin has continued to decline to 9.62% indicates that the profit model in the transformation process has not yet been validated. The main bottlenecks are

, , and .

Looking forward, the company is expected to improve its profitability through the following paths:

• Increase the proportion of high-margin whole-satellite business
• Leverage the scale effect of the Wenchang Super Factory
• Expand the high-end application market for Beidou terminals
• Strengthen product R&D innovation and cost control

However, at the current valuation level, investors need to be alert to the risk of valuation bubbles and closely monitor the emergence of a turning point in gross profit margin.

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[1] Tencent News - Leading Commercial Space! China Spacesat is Far Ahead (https://view.inews.qq.com/a/20251229A05AVK00)
[2] Zhihu Column - Panoramic Analysis of Investment Opportunities from Thousand-Satellite Manufacturing to Commercial Space (https://zhuanlan.zhihu.com/p/1982379144554759175)
[3] Sina Finance - Halted “Pass the Parcel” After 156% Surge, China Spacesat’s Stock Plunges After Valuation Bubble Burst (https://finance.sina.com.cn/roll/2026-01-07/doc-inhfnvip7431910.shtml)
[4] Eastmoney - Eve of Commercial Space Outbreak: Value Decoding of the Satellite Manufacturing Track (https://caifuhao.eastmoney.com/news/20251229042646267455440)