China Merchants Securities released a research report stating that China's commercial space industry is a strategic emerging sector where national strategy and industry trends are in resonance. The year 2026 is expected to see intensive catalysts, including the validation of reusable rocket technology and progress in the IPOs of commercial space companies. The firm is optimistic about near-term investment opportunities in the "rocket supply chain where supply gaps exist" and long-term opportunities in "rocket OEMs with business model advantages and the satellite industry chain possessing inflation-resistant attributes." The main views of China Merchants Securities are as follows:
The core bottleneck currently lies in launch capacity, and the supply chain is likely to benefit first. Born in 2015, China's commercial space industry has, over a decade, essentially built a complete industrial chain. This chain is composed of three core segments—satellites, rockets, and launch sites—and is gradually extending into tracking, control, and applications. The report identifies the fundamental contradiction within the industry as a severe "shortage of launch capacity," where rocket launch capability has become the core bottleneck restricting the industry's scaled development. In 2025, there were 323 orbital rocket launches globally: the US conducted 193 launches (SpaceX alone accounted for 165), while China conducted 92 launches (the Long March series accounted for 69). A total of 4,517 satellite payloads were deployed globally, with the US deploying 3,724 and China deploying 372. This paints a competitive landscape of "the US leading for now, with China in second place." Commercial launches accounted for 82% of US rocket launches, and the total launch capacity of US rockets is approximately 10 times that of China. Consequently, the firm believes resolving the launch capacity bottleneck is key to activating domestic commercial space development, with the rocket supply chain having relatively high certainty of benefiting.
For the rocket segment, focus on progress in reuse technology, as business models are poised for an upgrade. The key to enhancing commercial space launch capacity lies in rocket reusability technology, which transforms the rocket body hardware from a "single-use consumable" into a "reusable asset," thereby significantly reducing the cost per launch and increasing launch frequency and total payload capacity. Technologically, US SpaceX's workhorse Falcon 9 successfully achieved first-stage vertical landing and recovery in 2015, subsequently entering a phase of routine orbital missions and first-stage reuse, with a reuse record reaching 32 times by 2025. China, however, only began its first validation launches for reusable rockets in 2025. In terms of cost, the launch cost for Falcon 9 is approximately $1,800/kg, compared to about $8,500/kg for Ariane 5, indicating a cost reduction per unit mass of roughly 4-5 times due to reusability. Considering that China's reusable rockets are expected to undergo intensive launch validation in 2026, a technological breakthrough could potentially trigger an explosive growth phase for the domestic commercial space industry. In the long term, the firm believes the business model focus for rocket OEMs may shift from R&D and manufacturing towards launch operations, potentially making this a sub-sector with outstanding profitability and operational efficiency within the industrial chain.
The satellite segment exhibits prominent long-term inflation-resistant attributes, with a market potential as vast as the starry sky. According to JSR statistics, to date, US SpaceX's Starlink has cumulatively launched 10,955 satellites, with a long-term plan for approximately 42,000. China's Guo Wang (GW) constellation has cumulatively launched 174 satellites, with a long-term plan for about 13,000. Shanghai Yuanxin's G60 constellation has cumulatively launched 108 satellites, with a long-term plan for around 15,000. According to the ITU website, by the end of December 2025, China formally submitted applications to the ITU for frequency and orbital resources for an additional 203,000 satellites (of which 193,000 applications came from the Radio Innovation Institute), covering 14 satellite constellations (including LEO and MEO satellites). This represents China's largest-ever concentrated international filing for frequency and orbit resources. Currently, Starlink's share of in-orbit satellites has exceeded 60% globally, while China's large-scale satellite networking is just beginning. Given the massive scale of China's constellation plans, the firm believes that once reusable rocket technology breakthroughs are achieved and the constraint of launch capacity is lifted, China's satellite networking deployment is expected to demonstrate significant growth elasticity.
Investment Thesis: Near-term optimism centers on launch capacity supply chain opportunities; long-term看好 business model and inflation-resistant attribute opportunities. 1) Near-term dimension: Launch capacity shortages restrict development; focus on the rocket supply chain poised to benefit first. Taking Falcon 9 as an example, the total cost per rocket is approximately $45 million. In terms of overall composition, the first stage, second stage, and fairing account for about 67%, 22%, and 11% of the cost, respectively. Regarding core components, engines and structural components account for about 43% and 33% of the cost, respectively, making the first stage and engines high-value segments. Recommendations include focusing on: ① Investment opportunities arising from the increasing penetration of 3D printing manufacturing processes, including 'shovel' plays like [铂力特] (covered by Military Industry team) and [华曙高科], and service providers like [钢研高纳] (invested in 钢研极光) (covered by Metals team) and [银邦股份] (invested in 飞而康) (covered by Metals team); ② Investment opportunities in high-barrier rocket body materials, including thrust chamber inner wall material supplier [斯瑞新材] (covered by Metals team) and niobium-tungsten nozzle material supplier [西部材料] (controlling 西诺稀贵) (covered by Metals team); ③ Investment opportunities in high-value, high-quality rocket structural components, including [超捷股份] (covered by Automotive team) and [广联航空] (planning to acquire 天津跃峰) (covered by Military Industry team). 2) Long-term dimension: After breakthroughs in reusable technology, focus on rocket OEMs and the satellite industry chain. ① The firm believes reusable technology will drive a transformation in the business models of rocket OEMs, shifting their focus from R&D and manufacturing towards launch operations, potentially making this a highly profitable and operationally efficient sub-sector. Suggested focus: potential listing candidates like [蓝箭航天] (IPO application accepted), etc. ② The firm believes that if the launch capacity bottleneck is broken, it will correspond to rapid growth in satellite demand. The satellite sector is a sub-sector with long-term inflation-resistant attributes. Suggested focus: [中国卫通] (covered by Communications team), [中国卫星] (covered by Military Industry team), etc.
Risk warnings include the progress of the domestic commercial space industry falling short of expectations, and the listing processes of commercial space companies being slower than anticipated.
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