Analysis of Sun Create Electronics (600990.SS)'s Sustained Losses and Assessment of the Military Electronics Industry's Prosperity

Based on the collected data, I have prepared a comprehensive analysis report for you:

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Sun Create Electronics Co., Ltd is a military electronics enterprise focusing on radar and electronic equipment manufacturing[0]. In terms of stock performance, the company has shown a strong upward trend since 2025:

Time Period	Gain
5-Day	+13.14%
1-Month	+18.66%
3-Months	+24.17%
6-Months	+33.02%
1-Year	+91.90%

However, the strong stock performance is in serious contradiction with the company’s fundamentals.

Based on the latest financial data[0][1], Sun Create Electronics’ key financial indicators show that the company is still in a state of deep loss:

Indicator	Value	Evaluation
Price-to-Earnings Ratio (P/E)	-33.53x	In loss status
Return on Equity (ROE)	-15.95%	Significantly negative
Net Profit Margin	-19.04%	Sustained losses
Operating Profit Margin	-18.86%	Losses expanding
Current Ratio	1.15	Barely healthy
Quick Ratio	0.76	Tight liquidity

• The company has recorded annual losses for three consecutive years
• Loss per share of $0.17 in Q3 2025
• Revenue of $514 million in the latest fiscal year (2024), but net losses continue to expand

A DCF valuation model using three scenarios shows[0]:

Valuation Scenario	Intrinsic Value	Deviation from Current Price
Conservative Estimate	6.13 CNY	-83.4%
Base Estimate	8.01 CNY	-78.3%
Optimistic Estimate	11.17 CNY	-69.8%
Probability-Weighted	8.44 CNY	-77.2%

The current share price of 36.94 CNY is

compared to its intrinsic value. The market may have pushed up the stock price based on restructuring expectations or theme speculation.

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According to industry research data[2][3], the prosperity of the military electronics industry has

in 2025, rather than declining:

Sector	2025 Gain	Evaluation
Aerospace Equipment	+113.6%	Leading the rally
Ground Ordnance	+64.3%	Strong
Military Electronics	+41.8%	Steady rebound
Aviation Equipment	+15.2%	Moderate
Marine Equipment	+8.5%	Lagging

• In Q3 2025, the military sector’s revenue grew
  24.6%
  year-on-year
• Net profit attributable to parent companies surged
  22.3%
  year-on-year
• Maintained double-digit growth for three consecutive quarters

• Among the 67 military enterprises that have released semi-annual report forecasts,
  41 are expected to see growth
  (accounting for 61.2%), while 26 are expected to see declines
• Representative Enterprise Performance:
  • Hongyuan Electronics: Net profit up 41%-61% year-on-year
  • Torch Electronics: Net profit up 50%-70% year-on-year

According to industry research information[2]:

1. Inventory replenishment cycle starts
   : Passive components enter the inventory replenishment stage
2. “14th Five-Year Plan” concluding effect
   : Downstream demand has “broken the ice”, releasing backlogged orders from earlier periods
3. Exports open up incremental growth
   : Breakthroughs have been made in military trade exports, with remarkable results in actual combat tests

• Guide Infrared: Signed an 879 million CNY model equipment system procurement agreement
• Yaguang Technology: Signed a 396 million CNY production preparation agreement

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Sun Create Electronics’ sustained losses are an

, mainly stemming from:

Factor	Analysis
Product Structure	Focused on complete radar systems, greatly affected by the procurement rhythm of models
Customer Concentration	High dependence on a single model
Cost Pressure	The trend of miniaturization and integration of military electronics compresses gross margins
R&D Investment	Sustained high R&D investment cannot be converted into performance in the short term

The military electronics industry shows obvious

:

Enterprise Type	Performance Characteristics
Leading Enterprises	Full order books, expected performance growth, valuation recovery
Segment Champions	Focus on core components, benefit from domestic substitution
Traditional Complete Equipment Manufacturers	Performance fluctuates greatly due to model cycles
Troubled Enterprises	Pressured by governance flaws or poor product sales, sustained losses

, greatly affected by model updates, but this does not represent the overall downward trend of the industry.

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• As the first year of the “15th Five-Year Plan” in 2026, military investment is expected to maintain growth
• Construction of new-quality combat capabilities is accelerating, with key development in fields such as unmanned intelligence, underwater combat, and network-electronic attack and defense

• The U.S. 2026 fiscal year defense budget reaches $960 billion, up 11% year-on-year
• European “rearmament” plan: €800 billion over 4 years
• Japan’s military expenditure has increased significantly for two consecutive years
• South Korea’s military expenditure will be increased by 7.5% in 2026

• China’s military product exports have moved from the “shortcoming filling” stage to the “capability output” stage
• 81% of Pakistan’s imported equipment comes from China
• Actual combat tests have enhanced international reputation

Theme	Key Directions
New-Quality Combat Capabilities	Unmanned/anti-unmanned equipment, military intelligence, missiles and radars
Military Trade	Main equipment manufacturers, missile and radar export enterprises
Civil-Military Integration	Commercial aerospace, gas turbines, domestic large aircraft

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Question	Conclusion
Why has Sun Create Electronics sustained losses?	Individual operational issues, affected by product structure and model cycles
Is the military electronics industry’s prosperity declining?	No , it has actually shown a significant rebound trend
Does industry differentiation exist?	Yes , high-quality enterprises have obvious recovery, while troubled enterprises are under pressure

1. Sun Create Electronics’ sustained losses
   do not represent
   a downward trend in the military electronics industry’s prosperity
2. The industry as a whole has shown an
   upward turning point
   trend, with both revenue and net profit growing in Q3
3. Public funds
   increased their allocation to the military sector for the first time
   in Q2, with their holding size increasing by 23% month-on-month
4. The military electronics sector has risen
   41.8%
   in 2025, reaching a historically high level

• The procurement rhythm of military equipment falls short of expectations
• Uncertainty in the progress of military market expansion
• Sustained price reduction pressure on products of some enterprises
• Sun Create Electronics’ current valuation carries overvaluation risk

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[0] Jinling AI Brokerage API Data - Sun Create Electronics (600990.SS) Company Overview, Financial Analysis and DCF Valuation

[1] Jinling AI Brokerage API Data - Sun Create Electronics (600990.SS) Financial Statement Analysis

[2] Cailianshe - “Order ‘Warmth’ Transmits to Performance: Will Military Electronics Step on the Gas in the Second Half of the Year?” (https://finance.eastmoney.com/a/202507303471307140.html)

[3] Report Pai - “2025-2026 Annual Strategy for the Military Industry” (https://www.baogaopai.com/article-284276-1.html)

[4] Sina Finance - “2026 Annual Strategy for the Military Industry: Layout for the 15th Five-Year Plan, Grasp New-Quality Capabilities and Military Trade” (https://stock.finance.sina.com.cn/stock/view/paper.php?symbol=sh000001&reportid=820782780303)