Soochow: Rare consumables in commercial aerospace reusable pathways, propellants special gas share & value increased.

Soochow released a research report stating that commercial spaceflight is reducing launch costs by utilizing high payload and reusable rocket technologies, driving the industry into a phase of high-density, standardized launches. During this process, the demand for propellants and special gases shows rigidity, with their costs increasing in the long term due to the overall cost compression of rockets. Liquid oxygen methane, with its advantages of cleanliness, ease of reuse and maintenance, has become an important direction for the development of new reusable rockets. Key points from Soochow are as follows: High payload and reusability are driving down rocket launch costs, with the rigidity of propellant and special gas demand leading to a long-term increase in their value and share of the total cost. The economic efficiency of rocket launches is becoming an important factor for the industry to transition towards high-density, standardized launches. The roadmap for reducing launch costs is clear, with high payload and reusability being core methods. Liquid methane as a propellant has advantages, with its share of the cost increasing. With high payload and reusability, the demand for propellants and special gases is highly related to the number of launches, and their cost share increases. Reusability technology significantly reduces the proportion of manufacturing costs in a single launch, but does not reduce propellant consumption, and the recovery process may even require additional fuel reserves. At the current point in time, Soochow calculates that the total cost of propellant and special gas required for a single launch of Falcon 9 is approximately $800,000. Considering rocket reusability, the cost of the rocket decreases from $50 million to $15 million, while the cost of propellant and special gas remains at $800,000 for a single launch, increasing the proportion of the total launch cost from 1.6% to 5.3%. Propellant and special gas requirements gradually become the most stable and predictable value segments. Commercial spaceflight is entering a phase of scaled launch, with continuous capacity release on the supply side. China has built a three inland launch sites (Jiuquan / Taiyuan / Xichang) + one coastal launch site (Wenchang) + a sea-based mother port (Dongfang Spaceport) + a commercial dedicated site (Hainan Commercial Launch) to achieve multiple-track coverage and specialized division of labor layout. Launch infrastructure continues to improve, with China currently having a total of 21 launch pads, with 5 under construction or planned. China's rocket launch frequency continues to increase, with 39 launches in 2020 and an estimated 92 launches (50 commercial launches) in 2025. The proportion of commercial launches is increasing, driving the industry to focus more on launch economic efficiency, which becomes a key factor in the transition towards high-density, standardized launches. Cost constraints remain, but the roadmap for reducing costs is clear, with high payload and reusability as core methods. China's launch costs have gradually decreased from around 115,000 RMB/kg in 2020, with a rapid drop to around 45,000 RMB/kg by 2029. The forces driving this trend include: 1) a significant increase in the capacity of new-generation launch vehicles, 2) the gradual maturity of reusable technology with intensive test flights, 3) the normalization of launch sites and processes leading to continued compression of the single-workplace launch cycles. SpaceX's mature Falcon 9 has stabilized at around 20,000 RMB/kg, and can reach even lower levels through reuse. Commercial rocket launches continue to reduce costs, with launch service prices falling, driving a burst in the industry's economy. The propellant roadmap is clear, with liquid oxygen methane having prominent advantages, while liquid oxygen kerosene is developing synchronously. Regarding the choice of fuel for reusable rockets, the industry has developed a pattern of parallel development of liquid oxygen kerosene and liquid oxygen methane. In the long term, the advantages of liquid oxygen methane are gradually increasing in prominence. 1) Liquid oxygen methane: burns cleaner with significantly lower carbon buildup than kerosene, has a wider thrust adjustment range, and has better storage and transportation safety compared to liquid hydrogen. It demonstrates clear advantages in new-generation rocket models that are aimed at high-frequency reuse and rapid turnaround, making it an important direction for the development of new reusable rockets. 2) Liquid oxygen kerosene: after extended engineering validation, it has a high level of technological maturity, and current domestic and foreign rockets and engines mainly use kerosene as the primary propellant. In the short term, there is a strong reliance on kerosene. Additionally, practice has shown that liquid oxygen kerosene rockets can also achieve first-stage recovery and multiple reuses. The main difference between the two lies in the carbon buildup issue during kerosene combustion, which requires higher inspection, cleaning, and maintenance of engines and pipelines after recovery, leading to a relatively higher turnaround cycle and operational complexity compared to the liquid oxygen methane route. Investment recommendation: Jiangxi Jovo Energy is highly recommended, as it is establishing itself as a specialized brand in aerospace special gases, with the value and share of aerospace special fuel gas supply expected to increase in the long term. The company is deeply involved in providing commercial aerospace special fuel gases, with supply capabilities for liquid hydrogen, liquid methane, helium, and matching reusable technology. Phase 1 of the Hainan Commercial Launch project has been completed, with clear plans for Phase 2 expansion to meet the demand for high-density launches. The company has strategic partnerships with rocket companies, gradually expanding to other commercial aerospace bases such as Dongfang Spaceport in Shandong Haiyang and the Satellite Launch Center in Jiuquan, Gansu. Risk warnings: commercial space launches fall short of expectations, propulsion technology evolution falls short of expectations, risks related to the safe operation of propellants and special gases, changes in industry policies and regulatory environments, risks of discrepancies between calculations and actual situations, and risks of short-term stock price fluctuations.