On April 14th, the commercial aerospace sector, which had been relatively dormant for a period, experienced a robust resurgence, with stocks such as Boyun New Materials, Aerospace Changfeng, Aileda, Aerospace Nanhu, Aerospace Huanyu, Aerospace Power, and Shaanxi Huada all witnessing significant surges.

According to reports from the Kechuangban Daily, at midday on April 14th, the CAS Space Kuaizhou-1A Yao-12 carrier rocket, named iNatural, was launched from the Dongfeng Commercial Aerospace Innovation Test Zone, successfully placing eight satellites, including the Postal Savings Bank of China satellite, into their designated orbits with pinpoint accuracy.

As we look to the future, a question of paramount importance arises: which segments within the commercial aerospace industrial chain truly boast high barriers to entry and possess long-term value?

The commercial aerospace industrial chain is notably extensive, with the upstream segment primarily focused on the manufacture of satellites and rockets, encompassing critical components such as engines, structural parts, specialized materials, and chips. The midstream encompasses launch services and ground equipment, while the downstream is dedicated to satellite application services, including satellite internet, remote sensing, navigation, and other diverse scenarios.

In terms of value distribution, the upstream segment accounts for approximately 30%. Although this is less than the downstream application services, it presents the highest technological barriers and represents the core area where future industry giants are likely to emerge, particularly in rocket research and development and manufacturing.

The research and development cycle for commercial carrier rockets often spans several years or even decades, necessitating continuous substantial investment and entailing high research and development risks from conceptual design, technological breakthroughs, prototype manufacturing, to multiple flight verifications. These factors collectively contribute to the barriers to entry and operation within the industry.

Currently, domestic companies like LandSpace have achieved significant breakthroughs in rocket carrying capacity and power systems. The ZQ-3, a medium-sized reusable liquid carrier rocket, is slated for its maiden flight and orbit insertion in December 2025, aiming for first-stage recovery and benchmarking against SpaceX's Falcon 9 and domestic models like the Long March 12A.

Reusable technology is a pivotal aspect of commercializing commercial aerospace. Only when rockets transition from being disposable to reusable can launch costs be substantially reduced, thereby supporting the demand for large-scale satellite networking.

Notably, LandSpace is the first domestic company to master liquid oxygen-methane engine technology and successfully achieve orbit insertion.

Compared to the liquid oxygen-kerosene used by Falcon 9, liquid oxygen-methane offers several advantages, such as virtually no carbon deposition, superior cooling performance, and self-pressurization capabilities. It is considered a cleaner, more maintainable, and future-oriented technological path. If Falcon 9 validated rocket reusability, then LandSpace aims to achieve more economical and efficient reuse through the liquid oxygen-methane route.

Therefore, whether it's rocket recovery or new fuel technologies, the objective is to minimize costs and increase launch frequency, thereby accelerating the commercialization process. This has fundamentally transformed the development logic of commercial aerospace.

Thus, it is evident that the core materials, components, and rocket development segments in the mid-to-upstream are the most technology-intensive, capital-intensive, and industrially influential parts. High barriers also imply that once scaled applications are achieved in the future, these segments may offer more substantial profit potential.

According to data from the Aerospace Intelligence Bureau, the current gross profit margins for core components and rocket manufacturing are approximately 50% and 40%, respectively, representing the most profitable segments in the industrial chain.

In recent years, with the dual impetus of policies and capital, the market size of China's commercial aerospace sector has continued to expand.

According to data from the China Investment Research Institute, it is projected that China's commercial aerospace market will reach RMB 2.3 trillion in 2024, with an average annual growth rate exceeding 20% from 2017 to 2024. Furthermore, according to forecasts by the Forward Industry Research Institute, this market size is expected to reach RMB 8 trillion by 2030.

Facing such a vast trillion-dollar blue ocean, which companies are poised to become the core beneficiaries?

Firstly, chain-leading companies like LandSpace.

LandSpace's business spans various segments, including upstream subsystems (rocket body structure, power systems, control systems, etc.), midstream rocket development and assembly, and launch services. It independently possesses full-chain capabilities from research and development, manufacturing, testing, to launch.

This means the company can autonomously control core segments and technologies such as rocket development, reducing external dependencies and effectively controlling costs, thereby building a strong operational "moat." On the other hand, the company has entered the supply chain systems of downstream leading clients such as China Satellite Network Group and Yuanxin Satellite, both of which plan to construct low-Earth orbit satellite constellations with scales exceeding 10,000 satellites, indicating significant future demand.

In addition to LandSpace, at least 10 domestic commercial aerospace companies, including Galactic Energy, Space Pioneer, CAS Space, and i-Space, have intensively initiated IPO processes. However, most of these competitors adopt liquid oxygen-kerosene or hybrid solid-liquid technological paths, and their current main or successfully launched models are primarily small to medium-sized rockets.

In contrast, LandSpace focuses on medium to large carrier rockets (the core tools for executing large-scale, high-density networking launches), potentially offering superior comprehensive competitiveness in terms of technological paths and cost reduction.

Secondly, core suppliers behind chain-leading companies that specialize in technological breakthroughs in specific high-barrier segments will also benefit from industry growth.

Currently, there are primarily two supply chain systems in the market: one is the "SpaceX Chain" formed around SpaceX, akin to the Optimus Chain in humanoid robots.

Currently, SpaceX has confirmed three A-share listed companies as its suppliers in China: Tongyu Communication, Sunway Communication, and Zisheng Technology.

Specifically, Tongyu Communication's MacroWiFi products have passed SpaceX interface certification, enabling direct signal interaction between ground terminals and Starlink satellites. In the future, if Starlink terminals expand into the consumer market, Tongyu Communication, as its antenna module supplier, is expected to rapidly increase its shipments based on the certification and orders already obtained.

Sunway Communication became a supplier of high-reliability RF and antenna components for SpaceX as early as 2022. The company has also publicly declared satellite business as its "second growth curve," although it is still too early for it to become a performance pillar. Additionally, Zisheng Technology provides high-end thermal insulation protective materials required for rockets and has confirmed supplies to SpaceX, although the current impact on its performance is minimal.

The other is the domestic supplier chain centered around LandSpace, akin to the "Unitree Chain" in humanoid robots.

LandSpace's local supply chain involves numerous companies, including those specializing in engine components, rocket-borne sensors, high-end forgings, etc. However, there are not many exclusive or core suppliers with strong technological capabilities, primarily including Sirui New Materials and Plattech, etc.

Specifically, Sirui New Materials is an exclusive supplier to LandSpace, with its products applied in rockets such as the ZQ-3. The company possesses core products and technologies for the thrust chamber inner wall of liquid rocket engines, filling a domestic gap. In particular, its nanocrystalline copper alloy material significantly enhances high-temperature resistance, occupying about 90% of the domestic market for liquid oxygen-methane engine thrust chambers and having few alternatives globally.

Looking at Plattech, it can metal 3D print rocket engine components, a technology that can shorten development cycles and reduce costs. Currently, the company has become a core partner of LandSpace, mass-producing components for liquid oxygen-methane engines, etc.

Looking ahead, the journey of commercial aerospace towards the vast expanse of the universe has just begun. Now may be a symbolic starting point for the industry to truly transition from concept to tangible reality.

Disclaimer

The content related to listed companies in this article is based on the personal analysis and judgment of the author, derived from information publicly disclosed by the listed companies in accordance with their legal obligations (including but not limited to interim announcements, regular reports, and official interaction platforms). The information or opinions in the article do not constitute any investment or other business advice, and Market Value Observer does not assume any responsibility for any actions taken as a result of this article.

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