Sichuang Electronics (600990.SS) 2025 Pre-loss of RMB 340 Million: Analysis of 'Military-to-Civilian' Progress in the Military Electronics Sector

Based on the latest information I have obtained, I will prepare an in-depth analysis report on Sichuang Electronics’ earnings warning and the progress of ‘military-to-civilian’ transformation in the military electronics sector.

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Sichuang Electronics (Stock Code: 600990.SS) released its 2025 annual performance forecast on January 11, 2026, expecting the full-year net profit attributable to shareholders of listed companies to be

, and the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses to be [1][2]. This marks the company’s , and the continued performance pressure has attracted widespread market attention.

Financial Indicators	2023	2024	2025 (Forecast)
Operating Revenue (RMB 100 million)	19.27	16.03	Slight Growth
Net Profit Attributable to Shareholders (RMB 100 million)	-5.53	-2.46	-2.65~-3.40
Asset-Liability Ratio	66.67%	68.31%	—

Although the company’s operating revenue increased slightly compared to the previous year, its overall scale is still insufficient to cover costs. The military electronics industry is undergoing a transformation from a ‘growth market’ to a ‘stock market’, with mature products facing price reduction pressure and the industry’s gross profit margin continuing to be under pressure[3].

Affected by delays in customer procurement plans, orders for some key projects in the sensing product business failed to be fulfilled during the reporting period. This reflects the direct impact of the uncertainty in the procurement rhythm of military equipment on the performance of industrial chain enterprises[1][2].

More challengingly, on January 11, 2026, the company received a notice from the Supply Bureau of the General Administration of Military Commission Organ Affairs,

[4]. The reason for the suspension is ‘failure to perform in accordance with contract provisions’.

• Scope of Impact
  : Will have a certain impact on the company’s material, engineering, and service businesses in the logistics support field in the short term
• Existing Contracts
  : Relevant contracts signed before the suspension date are not affected
• Company’s Response
  : Has launched an internal investigation into the matter and is actively preparing to file an appeal

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Despite Sichuang Electronics’ difficulties,

. In 2025, the military industry sector as a whole rose by 30.3% cumulatively, among which , second only to ground equipment (64.3%) and aerospace equipment (113.6%)[5].

In the third quarter of 2025, the military industry sector’s operating revenue increased by 24.6% year-on-year, and the net profit attributable to shareholders surged by 22.3% year-on-year, indicating a significant recovery in prosperity. Among the sub-sectors, ordnance, ships, and electronic information continued to see high growth in performance[5].

According to research reports from AVIC Securities and Guojin Securities, the ‘military-to-civilian’ transformation of military electronics is accelerating along the following paths[3][5][6]:

Development Direction	Specific Content	Representative Fields/Enterprises
Civil Aircraft Applications	The C919 has entered the mass delivery stage, and China Eastern Airlines’ 100-unit order is progressing steadily	AVIC Xifei, AVIC Hi-Tech
Low-Altitude Economy	Substantial acceleration, and the UAV industrial chain is developing rapidly	China UAV, Aerospace Rainbow
Commercial Aerospace	Flourishing across the country, with accelerated implementation of rocket, satellite manufacturing, and terminal applications	Aerospace Electronics, China Satellite

Military electronics is located in the upper and middle reaches of the industrial chain, and its products generally have dual-use for military and civilian purposes. The application of military technology in civilian fields can break through the ceiling of military applications, and the revenue scale of listed companies with military-to-civilian technology attributes is expected to further open up new growth[3].

With the improvement of software independence in China, the integration of software and hardware will provide more empowerment and efficiency improvement for weapons and equipment. The improvement of military technology capabilities provides a material basis for military-to-civilian transformation[3].

The scope of the ‘large military industry’ has been greatly expanded, and it no longer only provides products and services for military customers. New fields such as civil aircraft, military trade, low-altitude economy, and commercial aerospace are rapidly becoming new growth poles for the military industry[5].

Sub-sector	Development Trend	Recommended Focus
Basic Mature Components and Chips	Intensified Competition, Price Reduction Pressure	Focus on Cost Reduction, Efficiency Improvement, and Scale Effect
Intelligent/New-Quality New Domain Chips	Rapid Growth Period	Embrace the Future, High Growth Potential
Military Trade-Related	Actual Combat Verification, Accelerated Exports	AVIC Chengfei, AVIC Shenfei
Unmanned/Anti-Unmanned Equipment	Strong Demand	China UAV, Aerospace Rainbow

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1. Pressure of Consecutive Losses
   : The cumulative loss over three years is expected to exceed RMB 1 billion, testing the company’s cash flow and financing capabilities
2. Impact of Military Procurement Suspension
   : The sudden suspension of military procurement qualifications will affect the company’s logistics support business in the short term
3. Intensified Market Competition
   : The traditional radar business is facing fierce price competition

1. Strong Stock Price Performance
   : Despite the performance loss, the company’s stock price has risen by 91.90% in the past year, and market expectations for the company are not completely pessimistic[7]
2. Solid Technology Accumulation
   : The company has solid technology accumulation in fields such as meteorological radars, air traffic control radars, and low-altitude warning radars
3. Dividend from Low-Altitude Economy
   : With the substantial acceleration of the low-altitude economy, the company is expected to benefit in the field of low-altitude safety monitoring

As a professional radar enterprise under China Electronics Technology Group, Sichuang Electronics has certain advantages under the general trend of ‘military-to-civilian’ transformation:

• Can apply radar technology to fields such as meteorological services, aviation management, and civilian security
• Leverage technological advantages to expand businesses related to the low-altitude economy
• Strengthen cooperation with fields such as civil aviation and smart cities

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1. Risk of Sustained Performance Losses
   : The company has suffered losses for three consecutive years; if it fails to turn a profit in 2026, it will face more severe financial pressure
2. Uncertainty in the Restoration of Military Procurement Qualifications
   : The company is currently actively preparing to file an appeal, but the restoration time is uncertain
3. Risk of Intensified Industry Competition
   : The price reduction trend of mature products in the military electronics industry will continue
4. Risk of Order Rhythm Uncertainty
   : The uncertainty in military equipment procurement plans may continue to affect the company’s performance

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Sichuang Electronics’ pre-loss of RMB 340 million in 2025 is a microcosm of the cyclical adjustment in the military electronics industry. In the opening year of the 15th Five-Year Plan, the military electronics sector is experiencing growing pains of transformation from ‘capacity expansion in a growth market’ to ‘stock optimization’. However, the ‘military-to-civilian’ strategy has opened up new growth space for military-oriented enterprises, and new fields such as low-altitude economy, commercial aerospace, and civil aircraft applications are becoming new growth engines for the industry.

For Sichuang Electronics, the key to achieving a performance turnaround lies in how to accelerate the expansion of the civilian market while maintaining the stability of its military product business.

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[1] NetEase Finance - Sichuang Electronics: 2025 Annual Pre-loss of RMB 256 Million to RMB 340 Million (https://www.163.com/dy/article/KJ2HEVI60539ARRF.html)
[2] National Business Daily - Sichuang Electronics: Expected 2025 Net Profit Loss of RMB 265 Million ~ RMB 340 Million (https://www.nbd.com.cn/articles/2026-01-11/4215282.html)
[3] AVIC Securities - Intelligence and New-Generation Equipment Spur New Demand: 2025 Investment Strategy for the Military Industry (https://finance.sina.com.cn/stock/stockzmt/2024-12-14/doc-inczkshz8396993.shtml)
[4] Xueqiu - Sichuang Electronics (SH600990) Stock Price (https://xueqiu.com/S/SH600990)
[5] Guojin Securities - 2026 Annual Strategy for the Military Industry: Layout for the 15th Five-Year Plan, Grasp Three Main Lines of New Quality, Military Trade, and Military-to-Civilian Transformation (https://www.baogaopai.com/article-284276-1.html)
[6] Dongfang Fortune Securities - Military Electronics: A Key Variable for Winning the Future - National Defense Informatization Construction in Full Progress (https://pdf.dfcfw.com/pdf/H3_AP202208111577122911_1.pdf)
[7] Jinling API Data - Sichuang Electronics Company Profile and Stock Price Performance [0]