Recently, A-share commercial aerospace concept stocks have collectively "ignited and soared," experiencing several consecutive days of strong, sharp gains. The successful completion of the Zhuque-3's ten-kilometer-level vertical recovery test, coupled with the establishment of the National Administration's Commercial Aerospace Department and the release of a three-year action plan... a series of positive developments have thoroughly ignited market enthusiasm. Amidst the clamor, a company not often seen on trending lists—Sirui Advanced Materials (688102.SH), a STAR Market firm—has captured attention. It doesn't build rockets or launch satellites, yet its stock price has risen for several days during this industry upswing, repeatedly hitting new highs.
So, is Sirui Advanced Materials worth a closer look?
Keeping Pace, Yet Not Stunning Let's cut to the chase and examine the performance figures. From 2019 to 2024, Sirui's revenue climbed from 570 million yuan to 1.33 billion yuan, representing a compound annual growth rate of approximately 18.6%. For the first three quarters of 2025, revenue reached 1.17 billion yuan, a year-on-year increase of 21.7%.
Net profit attributable to shareholders grew from 30.5 million yuan in 2019 to 110 million yuan in 2024, with an average compound annual growth rate exceeding 30%. For the first three quarters of 2025, it increased 37.7% year-on-year to 110 million yuan, nearly matching the full-year figure from the previous year.
Gross profit margin has also been slowly climbing; the figure for the first three quarters of 2025 was 3 percentage points higher than the full-year 2023 margin, indicating that higher value-added products are beginning to "scale up."
Looking purely at the numbers, in a market environment where revenues of tens of billions and doubling growth are not uncommon, a company of Sirui's scale, measured in single-digit billions of yuan, can only be considered "steady"—it keeps pace but hardly stuns. This raises the question: why has this seemingly conventional "steady player" suddenly garnered favor from capital, causing its stock price to "shoot up from the ground"?
One of Only Two Domestic Firms Mastering Rocket "Heart" Material, Passes Key Tests Like Zhuque-3 The answer likely lies within the rocket's "heart." As mentioned at the outset, while Sirui does not build rockets or launch satellites, the aerospace-grade high-strength, high-conductivity copper alloy material it has developed is a key material for the engine thrust chambers of several domestic commercial rocket companies. In 1969, when Armstrong stepped onto the moon, he famously said, "That's one small step for man, one giant leap for mankind." This not only symbolized humanity's monumental feat of exploring the universe but also reflected the deeper significance of the US-Soviet space race during the Cold War. Superficially a contest of technology and national power, the space race actually propelled rapid advancements in fields like aerospace, communications, and materials, giving rise to modern satellite navigation, remote sensing technology, and even the precursor to the internet. Today, a new space race is unfolding between China and the United States. Public data shows that the US's SpaceX Starlink constellation already has over 9,000 satellites in orbit. In January of this year, its application for a 7,500-satellite deployment plan was just approved by the FCC, targeting the launch of 42,000 satellites by 2033. China's deployment is equally rapid. The country's first commercial aerospace launch site has been built, and multiple constellation plans like "Guowang," "Qianfan," and "Honghu" are being intensively deployed, with a total planned scale exceeding 33,000 satellites. Furthermore, China recently submitted a filing with the ITU for frequency and orbital resources for a staggering 203,000 satellites at once, demonstrating a posture of "contesting for every inch of orbital space."
Moreover, under the core principle of "first come, first served" for low-earth orbit and spectrum resources, domestic rockets are accelerating their breakthroughs—key models like the Zhuque-3 and Tianlong-3 have intensively completed critical tests. In 2025, China conducted 92 orbital rocket launches, a significant 35% increase compared to the previous year. According to brokerage estimates, by 2030, China's annual output value from rocket launches and satellite manufacturing is expected to reach 85 billion yuan, with the entire commercial aerospace sector potentially leveraging an industrial scale of 7-10 trillion yuan. Currently, the industry is still in its nascent stages. However, what is the foundation for a technology to become commercialized and scalable? It must be cost. SpaceX's success has proven that reusable rockets can drastically reduce launch costs, representing the core future direction of the industry. For reusable rockets, engine components are no longer "disposable items." They must withstand multiple extreme operating conditions: instant ignition, exposure to thousands of degrees of scorching heat, intense vibration, followed by cooling, and then reignition... This imposes even more stringent requirements on the material for the engine's core component—the thrust chamber. The thrust chamber is essentially the rocket's "combustion chamber" and "nozzle," where fuel burns violently to generate massive thrust. The material for its inner wall is directly exposed to high-temperature gases exceeding a thousand degrees Celsius, while also requiring excellent thermal conductivity to rapidly draw away heat and prevent itself from being burned through. This particular material has long been a "chronic ailment" for China's aerospace industry. That was until companies like Sirui Advanced Materials successfully developed aerospace-grade high-strength, high-conductivity copper alloy materials, with chromium zirconium copper as the core. Public information indicates that, besides the established player China Aluminum Luoyang Copper, Sirui Advanced Materials is currently the other domestic company engaged in this business. Its material can withstand combustion temperatures of 3000°C while possessing excellent thermal conductivity, solving the "ablation" challenge in rocket engines, filling a domestic technological gap, and achieving import substitution. Furthermore, it has been validated in key tests by leading domestic commercial rocket companies such as LandSpace, Jiuzhou Yunjian, iSpace, and Deep Blue Aerospace, and is used in actual rocket launches.
The story here is compelling, filled with buzzpoints like "chokepoint technology," "import substitution," and the "vast expanse of stars." However, objectively speaking, commercial aerospace in China is still an early-stage sector, and it will take time for it to truly translate into substantial company earnings. Consequently, this gleaming commercial aerospace business generated revenue of just over 30 million yuan in 2024. In the first half of 2025, revenue further increased to 23.29 million yuan. For a company with annual revenues exceeding one billion yuan, this contribution remains relatively small. It is more like a seed that has sprouted but is far from maturity. The company itself is aware of this; starting in 2024, it began expanding production, planning to build an annual capacity of 300 tons of forgings and over a thousand sets of thrust chamber components. This aims to alleviate its capacity constraints (utilization rate exceeded 80% in 2023) and match the continuously growing market demand. In the future, if commercial aerospace launches indeed surge as expected, and the company's capacity and yield rates can keep up, then this seed has the potential to grow into a towering tree, truly supporting the company's second growth curve.
Multi-Sector "Hidden Champion," But With a Visible Ceiling Setting aside the starry ambitions, Sirui's foundation is actually its "ground-level business," cultivated for over thirty years. The company's core business primarily focuses on two segments—high-strength, high-conductivity copper alloy materials and products, and medium-high voltage electrical contact materials and products. Together, these contribute approximately 70% of revenue.
The technical terms might sound obscure? In reality, these are essential foundational materials in modern industry. First, high-strength, high-conductivity copper alloys and products. The key characteristics of these materials are high-temperature resistance, high strength, and excellent electrical and thermal conductivity. They are mainly used in traction motors for rail transit, battery connectors for new energy vehicles, heat dissipation modules for consumer electronics, and 5G communication base stations, among other areas.
In this niche segment, Sirui has secured a place at the global table. Comparing its products with international giants like Germany's KME and Japan's Mitsubishi, its key parameters are already on par.
Sirui has become one of the world's major suppliers in this segment, with customers covering renowned domestic and international companies like Wabtec Corporation, Alstom, Siemens, Škoda, GE, and CRRC, achieving import substitution. Next, medium-high voltage electrical contact materials and products. Against the backdrop of the global energy transition, rising electricity demand, accelerated national grid construction, and a surge in renewable energy installations are collectively driving rapid growth in demand for power equipment. The core component of switches—the contact—requires copper-chromium and copper-tungsten materials produced by Sirui. In this even more specialized track, Sirui has achieved global leadership, leading the industry in several technical parameters. It has not only solved the reliance on imported contact materials for grid construction but also sells its products globally. Its customers include industry leaders like Siemens, ABB, Eaton, Toshiba, China XD Group, and Pinggao Electric.
In 2024, the company made a breakthrough in the field of high-voltage, high-current, large-specification contact products, developing copper-chromium contacts for vacuum switches rated at 126kV, 145kV, and 252kV, positioning it to gain an advantage in the vacuum switch sector. As of November 2024, the company's domestic market share for copper-chromium contact materials exceeded 60%, with a global market share of approximately 50%, firmly ranking first in the global niche market. However, this champion has its worries. Although Sirui has become a major player in its niche segments, the revenue from its high-strength, high-conductivity copper alloy business has hovered around 500 million yuan for years, while revenue from medium-high voltage electrical contact materials is only slightly over 300 million yuan. This reflects another reality: the ceiling for its core industries might be limited.
Summarizing Sirui Advanced Materials: it possesses technology, yet its situation carries a hint of awkwardness. On one side are the high-tech, narrative-rich businesses like commercial aerospace and controlled nuclear fusion, still in the early adoption phase and unlikely to contribute significantly to earnings in the short term. On the other side is the stable but seemingly growth-capped core business. The key questions remain: when will future sectors like commercial aerospace and controlled nuclear fusion achieve scaled implementation, and how much earnings elasticity can they truly deliver? These are the growth imperatives Sirui must face, and they are also the core reasons for the market's continued focus on the company. Finally, a point of caution: due to its continued bets on new businesses, the company's free cash flow has been consistently negative in recent years. Its own operational "blood generation" cannot cover capital expenditures, even requiring it to take on debt. The interest-bearing debt ratio reached 30.7% as of the end of September 2025.
Yet, Sirui is quite generous in rewarding shareholders, not only maintaining annual dividends but also distributing them in the first three quarters of both 2024 and 2025.
Since its IPO in 2022, the company has accumulated cash dividends totaling 167 million yuan, representing over 40% of its total profits during the same period.
Is this strategy of "bleeding cash while paying out" a positive or negative sign?
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