In-depth Analysis of China's Commercial Aerospace Policy Evolution and A-share Investment Opportunities

This period marked the initial stage of China’s commercial aerospace industry, with policies mainly focused on tentative opening, allowing private capital to participate in the aerospace industry to a limited extent, laying the foundation for subsequent deep opening.

, during this phase, policies accelerated significantly. The state issued a series of guiding opinions supporting the development of commercial aerospace, encouraging social capital to enter fields such as satellite manufacturing, launch services, and ground equipment.

Policy focus shifted to standardized development, establishing a more complete regulatory system to ensure the healthy development of commercial aerospace under safe and controllable conditions. During this period, the government began to build a policy framework that emphasizes both ‘development’ and ‘safety’.

, marking the industry’s status upgrade from ‘industry supplement’ to ‘new growth engine’. This policy upgrade has brought significant development opportunities for related A-share companies.

Traditional aerospace equipment manufacturing enterprises mainly rely on military orders and have obvious cyclical characteristics. After being included in strategic emerging industries, commercial aerospace has opened up a broad space in the civilian market, and enterprises have obtained growth valuation premiums.

Most commercial aerospace enterprises are in a state of loss or meager profit, making the traditional PE valuation ineffective. The market pays more attention to technical strength, market share, and future revenue growth potential, so PS (Price-to-Sales ratio) has become a more important valuation indicator.

Policy support reduces enterprises’ policy risks and financing costs, increases market expectations of certainty for future growth, thereby promoting the upward shift of the valuation center.

• Industry Leader Status
  : As a core enterprise in domestic satellite manufacturing and operation, it has a complete industrial chain advantage.
• Obvious Policy Benefits
  : Driven by commercial aerospace policies, the satellite application market is expanding rapidly.
• High Technical Barriers
  : Has technical capabilities in all links of satellite design, manufacturing, and operation.

[0]:

• Current Stock Price: 54.31 RMB
• Market Capitalization: 64.22 billion RMB
• 2024 Stock Price Increase: 76.05%
• YTD Increase: 102.95%

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According to DCF analysis[0], the company’s current valuation is significantly higher than its intrinsic value. The conservative valuation is 8.36 RMB, neutral valuation is 10.68 RMB, and optimistic valuation is 16.78 RMB. The current stock price is significantly overvalued, which reflects the market’s optimistic expectations for the prospects of commercial aerospace and policy dividends.

• Beneficiary of Military-Civilian Integration
  : Has layout in both military radar and civilian communication fields.
• High Performance Elasticity
  : Policy changes have a significant impact on performance, and the stock price has high elasticity.
• Undergoing Technical Transformation
  : Is transforming from traditional military industry to commercial aerospace services.

[0]:

• Current Stock Price:22.93 RMB
• Market Capitalization:36.65 billion RMB
• 2024 Stock Price Increase:188.43%
• YTD Increase:225.71%

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DCF analysis shows[0] that the company’s current valuation is seriously higher than its fundamentals. The neutral valuation is 0.63 RMB, and the current stock price is far beyond the reasonable valuation range. This extreme overvaluation reflects the market’s strong expectations for the company’s business transformation.

1. Policy-driven Certain Growth
   • Inclusion of commercial aerospace in strategic emerging industries brings policy certainty
   • Large-scale national investment in satellite internet, remote sensing applications and other fields

2. Huge Market Space
   • The global commercial aerospace market size is expected to reach the trillion-dollar level by 2030
   • China has late-mover advantage and policy support in this field

3. Expectation of Technological Breakthroughs
   • Breakthroughs in technologies such as reusable rockets and low-cost satellites
   • Commercialization of satellite internet and remote sensing applications

1. Valuation Bubble Risk
   • Current stock prices are seriously deviated from fundamentals, with high correction risks
   • Market expectations are overly optimistic and difficult to realize in the short term

2. Uncertainty in Technology Transformation
   • There is uncertainty in the transformation from military technology to civilian technology
   • The maturity of business models requires time and market verification

3. Intensified International Competition
   • International giants like SpaceX have established advantages in the commercial aerospace field
   • There is great pressure in technology catching-up and market competition

: Current valuation levels are too high; it is recommended to wait for correction opportunities. Focus on policy implementation effects and company performance realization.

: Pay attention to the gradual release of policy dividends and the timing of technological breakthroughs. Focus on high-certainty segmented fields such as satellite applications and ground equipment.

: Commercial aerospace is a long-term trend; it is recommended to make strategic allocations at reasonable valuation levels. Focus on leading enterprises with core technical advantages and commercialization capabilities.

• China Satellite (600118.SS)
  : Industry leader, clear policy benefits, strong technical strength

• Aerospace Development (000547.SZ)
  : High elasticity, but need to pay attention to the progress of performance realization

• Pay attention to other commercial aerospace-related targets, such as satellite communication, ground equipment and other segmented fields

1. Position Control
   : Given the current valuation level, it is recommended that the total position does not exceed 10-15% of the investment portfolio
2. Batch Position Building
   : Adopt a batch position building strategy to avoid heavy positions at high levels
3. Stop-loss Setting
   : Set a reasonable stop-loss level, controlled within a loss range of 20-30%
4. Regular Evaluation
   : Regularly evaluate policy effects and changes in company fundamentals, and adjust investment strategies in a timely manner

The policy evolution of China’s commercial aerospace from ‘ice-breaking’ to strategic emerging industry has brought historic development opportunities for related A-share companies. However, the serious overvaluation of current stock prices reminds investors to remain rational, and fully recognize valuation risks while grasping policy dividends.

Successful investment requires finding a balance between policy trends, technological development, and valuation levels. It is recommended that investors maintain a long-term perspective and layout this strategic emerging industry with great potential at a reasonable valuation level.

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[0] 金灵AI数据 - 股票实时报价、公司概况、财务分析、DCF估值
[1] Bloomberg - “China’s Hong-Kong Listed Stocks May Extend Lag on Tech…” (https://www.bloomberg.com/news/articles/2025-12-16/china-s-hong-kong-listed-stocks-may-extend-lag-on-tech-rotation)

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