Shengyang Technology (603703) Limit-Up Analysis: Driven by Satellite Communication Tailwinds but Pressured by Valuation

Shengyang Technology (603703) surged to a strong limit-up on January 12, 2026, closing at RMB 18.90 with a 10.01% increase, triggering the abnormal trading movement scenario under the Shanghai Stock Exchange (SSE) stock trading rules. The company’s cumulative closing price deviation reached 20% over three consecutive trading days (January 8, January 9, January 12), and has issued an abnormal fluctuation announcement to remind investors of secondary market trading risks [1][2].

The core driver behind this limit-up stems from the institutional research reception held by the company on January 5, 2026. Leading institutions including CITIC Securities, Bank of Communications Fund, and Huafu Securities conducted on-site research, focusing on the commercialization progress of the DVB-NIP technology of its subsidiary FTA in the satellite communication terminal field. During the research, the company disclosed that its South America project with a top global satellite operator has entered the implementation phase, and it has signed cooperation agreements with European communications satellite company Eutelsat and another leading global satellite operator. Three models of satellite internet terminals adapted to different overseas demands have completed R&D and entered the small-scale trial production stage [1].

From a technical perspective, the current market performance shows typical characteristics of a capital-driven rally. Today’s trading volume reached 106.2 million shares, approximately 7.5 times the average trading volume, and the turnover rate climbed to 25.59%, indicating that while off-market capital poured in heavily, profit-taking investors were actively cashing out at high levels. The stock price has hit a 52-week high of RMB 18.90, doubling from the 52-week low of RMB 8.46. Short-term technical indicators show that the stock price is well above the 20-day moving average (RMB 14.61), 50-day moving average (RMB 13.10), and 200-day moving average (RMB 11.27), presenting a clear bullish alignment pattern [0].

Looking at the price increases across different periods, the stock has risen 25.17% in 5 days, 47.43% in 1 month, 65.79% in 3 months, 80.69% in 6 months, 29.10% year-to-date, and 73.24% in 1 year, showing a continuous trend of upward growth [0].

However, there is a significant divergence between the fundamental data and the current stock price. The company is currently in a loss-making state, with negative trailing twelve months (TTM) net profit, a net profit margin of -4.07%, an operating profit margin of -3.27%, and a return on equity (ROE) of -4.49%, indicating weak shareholder return capability. In terms of valuation, the TTM price-to-earnings (P/E) ratio is approximately -210x, and the price-to-book (P/B) ratio is 9.32x, which has deviated from the reasonable range of the traditional valuation framework [0].

The company’s main business covers four segments: high-speed vehicle cables, data cables, satellite communication terminals, and display devices. It is worth noting that in the abnormal fluctuation announcement, the company clearly warned that its satellite communication business “is still in the early stage of commercialization”, “accounts for a small proportion of the company’s main business revenue”, and “has limited impact on the company’s short-term performance” [2]. This means that the current stock price rise mostly reflects the market’s expectations for long-term development prospects rather than short-term performance support.

Institutional research activities are often important signals of changes in market sentiment. During the research reception on January 5, 2026, the management clearly stated that “the company’s overall situation is improving, market demand is strong, orders are sufficient, and production and operation are progressing steadily as planned”, and emphasized that the satellite communication terminal business “closely aligns with the national commercial aerospace development strategy and has promising future growth” [1]. This statement creates a tension with the loss-making fundamentals, but provides the market with a narrative framework of “turnaround from distress”.

From an investment logic perspective, the market seems to be assigning a high long-term growth premium to the company’s satellite communication business, which echoes the previous statement that “low-orbit satellite communication terminals are expected to be launched in 2027” [1]. However, investors need to carefully evaluate the rationality of this long-term growth expectation at the current valuation level.

A turnover rate of 25.59% is extremely high in the A-share market, which usually occurs in two scenarios: first, the stage of rapid pull-up and distribution after the main capital has a high degree of control; second, intense turnover of off-market capital when there are major changes in fundamentals. Combined with the background of 7.5-fold volume expansion and three consecutive days of abnormal fluctuations, the latter scenario is more likely. The massive inflow and outflow of capital indicate increased short-term speculative attributes, and the corresponding risk of stock price volatility rises.

: The current P/E ratio is approximately -210x, and the stock price has hit a 52-week high. Fundamentals cannot support such a high valuation level, and there is a significant risk of a valuation bubble [0][2].

: The satellite communication business has limited actual contribution to the company’s short-term performance, being more of a long-term growth story rather than a short-term catalyst. The company has clearly warned that this business “accounts for a small proportion of the company’s main business revenue” [2].

: After triggering abnormal fluctuations, the company may face inquiries from the exchange or temporary suspension for inspection, leading to uncertainty in subsequent information disclosure [2].

: The high turnover rate (25.59%) indicates severe divergence among capital participants. If subsequent buying interest is insufficient, the stock price may face pressure for a sharp correction.

: If the satellite communication business progresses as planned and gradually contributes to performance, the current valuation may receive fundamental support. The company’s cooperation framework with Eutelsat and leading global satellite operators provides initial verification of technical feasibility and market potential [1].

: For investors with high risk tolerance, if the stock price pulls back to the range of RMB 15-16 (close to the support of the 10-day to 20-day moving average), they may consider accumulating positions in batches, with a stop-loss level set below RMB 14.

This round of limit-up for Shengyang Technology is mainly driven by institutional research activities and positive progress in the satellite communication business, but there is a significant divergence between fundamentals (loss-making state, high negative valuation) and stock price performance. Although the company’s satellite communication business aligns with the direction of the national commercial aerospace development strategy, it is still in the early stage of commercialization and is difficult to be reflected in performance in the short term. Technically, it shows a strong bullish pattern, but the extremely high turnover rate of 25.59% indicates fierce short-term capital divergence and high volatility risk.

Chasing the rally at the current level is not recommended. Investors should closely follow subsequent regulatory inquiry responses, the content of the controlling shareholder’s inquiry letter response on January 13, and whether there are new business progress announcements. After a pullback, investors may consider positioning based on their personal risk preferences, but must strictly set stop-loss levels and recognize the long-term nature of the satellite communication business.

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• [0] Jinling Analysis Database - Shengyang Technology Real-Time Quotes and Historical Data
• [1] Shengyang Technology January 2026 Investor Relations Activity Record
• [2] Shengyang Technology Stock Trading Abnormal Fluctuation Announcement (Eastmoney.com / China Finance Network)

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