Guotai Haitong: Commercial aerospace top-level design continues to be strengthened, optimistic about the industry's low-cost, high-reliability, and large-scale development.

Guotai Haitong released a research report stating that commercial aerospace has become a key area of global technological competition, with the scarcity of low Earth orbit satellite frequency resources intensifying global competition. China's commercial aerospace industry is entering a period of development opportunities, with multiple constellations entering the large-scale networking stage. There have been breakthroughs in reusable rocket technology and large liquid rocket technology, the acceleration of the Hainan commercial spaceport Phase II project, and the landing of terminal application scenarios and the widening of investment and financing channels. The explosive demand, technological innovation, and breakthrough in application scenarios resonate with each other, ushering in a period of large-scale development opportunities for China's commercial aerospace industry. Key points from Guotai Haitong include: 1. The top-level design of commercial aerospace continues to strengthen, with policy guidance unleashing the innovative potential of the industry. Since the 2023 Central Economic Work Conference designated commercial aerospace as a key industry for development, policies have continued to ramp up. In 2024, commercial aerospace was mentioned for the first time in the government work report; in June 2025, the China Securities Regulatory Commission included commercial aerospace in the scope of the fifth set of listing standards for the Science and Technology Innovation Board; on September 8, the Ministry of Industry and Information Technology issued a satellite mobile communication service operation license to China United Network Communications, further opening up application scenarios. The scarcity of resources in low Earth orbit satellite frequency bands has intensified global competition, with the United States significantly increasing the pace of commercial satellite launches. China still needs to address shortcomings in terms of capacity, costs, and reliability. With the rapid progress of domestic Gw constellation and "Qiansail" constellation deployments, as well as the issuance of satellite mobile communication licenses opening up terminal application scenarios and widening financing paths for industry chain companies, the industry's innovative potential is gradually being released. 2. The commercial aerospace industry chain is accelerating its improvement, with demand and supply driving the industrial scale development. Commercial aerospace relies on technological innovation and the supporting industry chain as a new force. China has a complete industry chain from high-end manufacturing to scene applications, covering upstream satellite manufacturing, midstream rocket launches, and terminal operations. The global commercial aerospace market has reached $480 billion, with high market shares in segments such as positioning/navigation, ground stations/equipment, satellite TV, and satellite communication. In 2024, China's investment and financing in the commercial aerospace sector is expected to increase significantly, with satellite launches, satellite communication, and commercial crewed spaceflight being popular investment and financing tracks. According to CCID Consulting, China's commercial aerospace industry is expected to exceed RMB 2.5 trillion by 2025, accelerating the construction of industrial clusters. Private commercial aerospace forces are emerging, driving the industry's low-cost/high-reliability/scale development from the supply side of satellite payloads and rocket manufacturing to the demand side of low Earth orbit satellite networking. 3. The demand for commercial aerospace satellite networks is surging, with new supply and technologies helping to break through development bottlenecks. 1) Constellation networking: the acceleration of large-scale constellation networking brings new opportunities for industry development. China successfully launched the 10th group of Internet satellites for the China Star Network, with a total of 9 groups of low Earth orbit satellites launched by 2025, significantly speeding up the networking progress. In addition, potential satellite networks such as the "Qiansail" constellation are of significant scale. 2) Rocket launches: the "Long March" series of rockets serve as the main force, with commercial rockets from companies such as the China Academy of Aerospace and Defense, iSpace, and Galactic Energy expected to become important incremental capacity. 3) Satellite manufacturing: the industry is blossoming, with private satellite manufacturers such as Spacetronn, Expace, and Changguang Satellite significantly increasing the number of satellites launched, becoming important sources of supply. 4) Launch sites: the acceleration of the second phase of the Hainan commercial spaceport project is gradually increasing launch capacity to meet the high frequency, large capacity, and low-cost launch demand. 5) Emerging technologies: new technologies such as reusable rockets and liquid rockets are increasing rocket launch frequencies and payload capacity. Several commercial rocket companies such as iSpace, Onespace, and Galactic Energy are expected to enter the maiden flight stage with reusable rockets, with large liquid rockets expected to become the mainstream technology route. Investment advice: The global aerospace competition establishes a high point, with technological innovation and breakthroughs in scenarios resonating well. The industry is poised for low-cost, high-reliability, and large-scale development. Commercial aerospace has become a key area of global technological competition, with the scarcity of low Earth orbit satellite frequency resources intensifying global competition. China's commercial aerospace industry is entering a period of development opportunities, with multiple constellations entering the large-scale networking stage, breakthroughs in reusable rocket technology and large liquid rocket technology, the acceleration of the Hainan commercial spaceport Phase II project, and the widening of investment and financing channels for terminal application scenarios. The explosive demand, technological innovation, and breakthrough in scenarios resonate well, offering China's commercial aerospace industry a period of large-scale development opportunities. Recommendations: 1) Benefit from the increased investment in rocket manufacturing, satellite payloads, and launch sites in new infrastructure; 2) Benefit from the large-scale application of satellite communication/navigation/remote sensing/space travel and other new scenarios; 3) Benefit from the integrated cost reduction demand for new technologies such as reusable rockets, liquid rockets, and flat satellites. Risk warning: The commercialization of key technologies and the pace of landing terminal application scenarios may be slower than expected. (Note: This translation may not be perfect due to the complexity of the content, but it captures the main ideas and key points of the original text.)