Commercial Space 2026 - From National Narratives to the Singularity Moment of Commercial Closed Loop

The global aerospace industry is undergoing a structural transformation similar to the Age of Exploration, marked by the rise of commercial space companies represented by SpaceX. China's commercial aerospace sector is reaching a critical juncture in transitioning from a policy incubation phase to an industrial explosion phase. We believe that 2026 will be the alpha year for China's commercial aerospace industry, with industry logic shifting from mere thematic mapping to fundamental investment based on supply chain performance realization. This judgment is based on the deep coupling of four dimensions: Policy - Urgency of high-frequency networking: With the completion of preliminary technical verification and the first batch of launches for the two giant constellations, Qianfan Constellation (G60) and China Star Network (GW), in 2024-2025, 2026 is expected to enter a high-frequency dense networking period. According to the frequency occupation rules of the ITU (International Telecommunication Union) and the promotion requirements of the National Development and Reform Commission's new infrastructure, 2026-2027 is a hard window period for achieving a thousand-star deployment, which will directly impact the capacity demand in the upstream manufacturing sector. Technology - Breakthrough of capacity bottlenecks: The long-standing capacity deficit issue that has constrained the deployment of Chinese constellations is expected to be structurally alleviated in 2026-2027. Reusable rockets, represented by Blue Arrow Aerospace's Future No. 3, are expected to achieve reuse during this period, significantly reducing launch costs and unlocking launch demand from the supply side. Capital - Reconstruction of the valuation system: The market's valuation system for commercial aerospace will shift from a relatively grand narrative of Total Addressable Market (TAM) discounting to specific PS and order visibility analysis. As satellite factory capacity ramps up and rocket launch frequency increases, the cash flow of core supporting enterprises related to commercial aerospace will significantly improve. External catalyst - SpaceX mapping effect: The rapid iteration of SpaceX's Falcon 9, Starship, and Starlink not only validates the business model but also creates urgent competitive pressure, forcing domestic policies and capital to accelerate their tilt towards core companies in the sector. Investment Recommendations We recommend that investors adopt a bell-shaped allocation strategy on the eve of 2026: on one hand, position in system integrators with state-owned backgrounds that occupy core frequency track resources (certain beta returns); on the other hand, invest in private leading companies in commercial rockets and core components and supporting sectors (such as phased array T/R components, laser communication, 3D printing, testing, and core networks) for high-elasticity alpha returns. Focus on A-share listed companies deeply bound to the commercial rocket/constellation supply chain, as they will be the first to benefit from the industry's shift from prototype development to mass production. Why 2026? - The Hard Constraints of the Time Window The uniqueness of 2026 should not be viewed merely as the natural passage of time in the evolution of the industrial chain; it is a resonance node formed by the overlap of three major cycles. By stepping out of pure commercial logic and examining commercial aerospace against the backdrop of great power competition and macroeconomic transformation, it becomes clear that commercial aerospace is no longer a game for the wealthy but a core component clearly defined by China as a new form of productive force. 1.1 Policy Cycle: Implementation of Top-Level Policy Design, from Encouraging Development to Systematic Deployment The decisive role of policy lies in providing enterprises with a certain long-term development framework. Recently, key catalysts for commercial aerospace have emerged: ➢ The start of the 15th Five-Year Plan (2026-2030): During the 14th Five-Year Plan, commercial aerospace was mainly mentioned as a forward-looking layout, with policies focusing on stimulating access and cultivating main entities; the 15th Five-Year Plan elevates commercial aerospace to the same pillar industry level as new energy vehicles and integrated circuits. ➢ Establishment of dedicated regulatory agencies: The establishment of the Commercial Aerospace Department of the National Space Administration is expected to greatly enhance administrative efficiency in launch approvals, license issuance, etc., promoting the standardized and large-scale development of the industry. ➢ Introduction of top-level action plans: The "Action Plan for Promoting High-Quality Development of Commercial Aerospace (2025-2027)" is the most critical policy document recently. Its significance lies in fully incorporating commercial aerospace into the overall layout of national aerospace development and systematically deploying 22 key measures across five major areas. Among them, the establishment of a national commercial aerospace development fund, opening national scientific research facility projects, and promoting government procurement will help address the funding, technology, and market pain points in industry development. 1.2 International Law Cycle: The Land Grab of Orbital Resources and the Life-and-Death Speed of International Connectivity ➢ Hard constraints: Low Earth orbit is not an infinite resource. Orbital positions and radio frequency spectrum (Ka/Ku/V bands) have the non-renewable scarcity attribute; according to ITU (International Telecommunication Union) rules, satellites in a constellation must complete a certain percentage of launches within a specific time frame after reporting, or else the frequency and orbital resources will be forfeited. ➢ Countdown: The time window for China's declared GW constellation (about 13,000 satellites) and G60 constellation (about 14,000 satellites) is approaching. ➢ Magnitude leap: Considering that large-scale networking requires several years, and previous networking plans have been delayed to varying degrees, 2026 is not only a node where technology is expected to mature but also a critical node for securing orbital resources. To ensure resources, it is essential to shift from verification launches to guaranteed orbital launches in 2026. This is not a multiple-choice question but a mandatory question at the strategic level. 1.3 Competition Cycle: Strategic Anxiety Under Competition ➢ Current situation: SpaceX has formed a monopoly-level launch capability, and Starlink has cumulatively launched over 10,000 satellites, beginning to evolve into direct mobile phone connectivity services, creating a de facto global coverage and military potential (such as the Star Shield program). For China, establishing a self-controlled low Earth broadband communication network (the Chinese version of Starlink) is not only a commercial demand but also a baseline requirement for national data security and national defense security ➢ Urgency: For China, establishing a self-controllable low-orbit broadband communication network is not only a commercial necessity but also a baseline requirement for national data security and national defense security. Technology, Application, and Capital Resonance — The Alpha Moment from Technological Validation to Commercialization 2.1 Technology: Key Technological Breakthrough Window, Cost Inflection Point Expected to Emerge Technological breakthroughs are the essential driving force of commercial space, with the core being the reduction of the cost per launch. Milestone progress in reusable rockets: On December 3, 2025, Blue Arrow Aerospace's Future Three successfully achieved orbital flight. Although the first-stage recovery failed, it validated the core flight control scheme, and subsequent iterations are expected. Reusable technology is key to reducing launch costs by an order of magnitude, and its breakthrough signifies that the largest cost bottleneck for large-scale satellite construction is being broken. Breakthrough in satellite production and on-orbit service capabilities: Automotive production lines (such as the GeSi Aerospace factory) have transformed satellite production from project-based to mass production. With the introduction of automated testing and flexible production lines, the cost per satellite is expected to drop from tens of millions to millions, and production capacity will shift from monthly to daily. Technology will drive satellite manufacturing and customization towards assembly lines and give rise to new business models such as space maintenance and refueling. 2.2 Application: From National Missions to Mass Consumption The final link in the commercial model loop is application, and clarifying market demand among users is the ultimate guarantee for sustainable industrial development. ➢ Direct mobile connection: The Ministry of Industry and Information Technology has opened satellite communication services to operators, promoting direct mobile connections and other consumer-level applications, unlocking a trillion-level civil market space. Huawei's Mate60/70 series has already initiated public awareness of satellite communication. With the evolution of the 3GPP R17/R18/R19 standards, future 5G/6G networks will be more integrated networks. This means that satellite communication is expected to become a standard feature for smartphones and smart cars, with the potential user base expanding from hundreds of thousands of professional users to hundreds of millions of ordinary consumers. ➢ The Sky Net of the Low-altitude Economy: 2026 is also the explosive period for the low-altitude economy (eVTOL/drone logistics). Low-altitude aircraft fly at hundreds of meters, and traditional ground base stations cover self-defense zones, making low-orbit satellite internet the best communication and navigation infrastructure for the low-altitude economy. The intersection of two trillion-level industries in 2026 will generate a huge multiplier effect ➢ Application scenarios continue to expand: In addition to communication, new business formats such as remote sensing data services, navigation enhancement, space tourism, and on-orbit manufacturing are emerging. Commercial space is deeply integrating into the digital economy, becoming a foundational infrastructure like electricity and the internet. 2.3 Capital: Intensive Inflow, Building a Full-Cycle Financial Support System ➢ IPO wave begins: In 2026, a batch of unicorn companies, including LandSpace, is expected to land on the Sci-Tech Innovation Board. ➢ National team funds guide long-term investment: The "Action Plan" clearly establishes a national commercial space development fund aimed at guiding capital for long-term, strategic, and value investments, injecting crucial patient capital into the industry. ➢ Multiple financing channels in parallel: In addition to national funds, industrial capital (such as local industrial funds), venture capital, and capital markets (the fifth set of listing standards on the Sci-Tech Innovation Board) together form a multi-layered financing system. Lessons from Others: Reflecting China's Path from the Development Journey of America's SpaceX Drawing on the development path of America's SpaceX, breakthroughs in low-cost technology, deep government-enterprise collaboration, and ecological feedback are core to its rapid growth. SpaceX's success is not only a commercial miracle but also a model of the combination of historical context, national will, and market forces, providing key reflections for China. 3.1 Reflection One: Drastically Reducing Costs is the Only Way to Commercialization SpaceX has reduced launch costs to historic lows through vertical integration and reusable technology, thereby creating a market. The focus of competition in China's commercial space is also on low costs, with key progress already made in this direction with models like the Long March 3B. Cost reduction is fundamental to stimulating downstream demand. 3.2 Reflection Two: Full Deep Collaboration as an Accelerator for Industry Rise The U.S. government fully supports SpaceX through legislative guarantees, technology transfers (such as the use of NASA technology in the Merlin engine), talent delivery, and facility sharing (leasing launch pads). This is highly consistent with China's current policies of opening national research projects, sharing experimental facilities, and promoting the transformation of technological achievements. In the future, deep participation of Chinese commercial space companies in national major projects is expected to become the norm. 3.3 Mapping Three: Capacity is the Ticket to the Venue, Application is the Moat Looking back at the rise of SpaceX, the pursuit of excellence in reusable technology can be understood as reducing the cost of building roads, while the launch of Starlink has fundamentally solved the problem of what goods to transport on those roads. The first half of commercial space is a capacity revolution, competing to make rocket chains cheaper; but the core logic of the second half has already been validated by Starlink—namely, application scenarios determine the industry's ceiling. For commercial space to achieve explosive growth, it cannot merely remain a tool for delivering packages; it must extend downstream to find a sufficiently large and rigidly demanded application market (such as communication and computing power) to achieve large-scale implementation. Finding the Greatest Common Divisor of Industry Explosive Period 4.1 Satellite Communication Payload - High Value Proportion, Deep Technical Barriers ➢ Value Chain Restructuring: In the era of low Earth orbit satellites, satellite platforms are standardized and commoditized, leading to a significant reduction in costs; however, to achieve high speed and multi-beam switching, the complexity and cost proportion of payloads (antennas, transponders, on-board processing) have risen against the trend, currently approaching 50% of the total satellite BOM cost. Investing in payloads means investing in the most valuable part of the satellite. ➢ Technical Requirements: Low Earth orbit satellites move at high speeds relative to the ground, and traditional mechanical antennas cannot meet the demand for rapid beam switching. Active phased array antennas are a better solution. ➢ Pricing Conditions: Quantity → As the Thousand Ships constellation enters its second phase of networking, the number of beams per satellite is expected to increase from single digits in the early stages to dozens or even hundreds, directly driving an exponential increase in the number of T/R components (transmit/receive channels). Price → Although the price per channel is decreasing, the performance requirements for radiation resistance and high-frequency (Ku/Ka/Q/V band) chips are increasing, giving companies with aerospace-grade frequency chip design capabilities strong pricing power. ➢ G60/GW Networking: Transitioning from prototyping to mass production, the performance of payload manufacturers will no longer rely on a single R&D contract but is expected to show linear shipment characteristics similar to the consumer electronics supply chain. 4.2 Core Supporting Components for Rockets - Short-term Incremental Logic, Manufacturing Process Innovation ➢ Catalyzing Frequent Launches of Liquid Reusable Rockets: Domestic reusable rockets such as the Long March 3B and Tianlong 3 are expected to maintain high-frequency launches in 2026, likely driving the supporting industrial chain into a phase of industrialized mass production. ➢ Consumable Attributes of Second-stage Rockets: Regardless of how the first stage is recovered, the current domestic technical level considers the second stage rocket, as an orbital stage, to be a disposable consumable. Each launch of a rocket requires a completely new set of second-stage engines, valves, pipelines, and structural components ➢ Vulnerable components: Even first-stage rockets have high-temperature and high-pressure pipelines, seals, and pyrotechnics (separation devices) that mostly belong to single-use or periodically mandatory replacement parts. ➢ Dimensionality reduction in manufacturing processes: The 3D-printed liquid nitrogen methane engine, in pursuit of combustion efficiency, employs extremely complex flow channel designs (such as regenerative cooling channels), while traditional subtractive manufacturing has low yield and high difficulty. Metal 3D printing is no longer just an enhancement but a production tool. 4.3 Satellite applications and supporting - SaaS logic, larger space Measurement and control SaaS: As the number of satellites in orbit increases from hundreds to tens of millions, relying on human power for measurement and control is no longer feasible. Automated measurement and control software and collision avoidance systems will become the infrastructure for air traffic control. This is a software ecosystem with extremely low marginal costs and high customer stickiness. Interconnectivity infrastructure: ➢ Hardware side: High-frequency, high-speed data transmission requires connectors to have extremely high vibration resistance and signal integrity. In critical actions such as satellite separation and stage separation, special connectors are single points that must not fail, and once certified by customers, they are difficult to replace. ➢ Software side: To achieve direct mobile phone connections to satellites, a powerful core network must be built on the ground to handle the entire machine and roaming. This is the necessary path for the implementation of 5G NTN. 4.4 Long-term outlook: Space computing power - a paradigm revolution from transmission to computation ➢ Initial cultivation stage (0-1): Unlike payload and rocket manufacturing, which have entered the industrialization realization phase, space computing power is still in the technical verification and small-scale demonstration application stage. ➢ Attention on AI large models: Recently, several leading satellite manufacturers both domestically and internationally have begun to attempt deploying lightweight AI models (such as target recognition algorithms) onto onboard computing platforms. ➢ Inter-satellite laser links bring the prototype of space data centers: Laser links connect the internal networks between satellites. Data can be distributed and exchanged in space, and satellite constellations are evolving into a distributed data center floating in space, generating demand for computing power. 5. Valuation framework and investment strategy In the face of explosive expectations for 2026, traditional PE valuation methods often fail at this stage, as most commercial aerospace companies are still in a phase of high R&D investment and low net profit adjustments to losses. For commercial aerospace companies on the brink of explosion, revenue growth is a more stable indicator than net profit. This represents the ability to capture market share and validate technology implementation With the commercialization of the commercial aerospace-related industrial chain, we believe it is essential to continuously track the performance of related companies, focusing on their ability to simplify revenue generation and control costs, while paying attention to the convergence of PS to PE. At this time, companies with scalable manufacturing capabilities, stable yield, and excellent cost control will enjoy valuation premiums. We believe that companies within the industry need to be comprehensively evaluated using a three-dimensional model of orders + pipeline + technology: Based on existing orders and revenue → current cash flow and certainty; Combined with the deployment of new products/business/capacity pipeline → future growth potential and pathways; Overlaying the growth premium brought by key technological breakthroughs (such as rocket recovery and chip-based payloads) → the ability and barriers to realize orders and pipelines; And considering the long-term strategic value of the orbital/frequency resources they occupy. We prefer a neutral stance and suggest focusing on: China Satellite Communications, China Satellite, CETEC, Aerospace Power, Aerospace Electromechanical, CATEC, and other national teams. Regardless of how the industry reshuffles, these companies, as core contractors and operators of China's aerospace engineering, have relatively low zero-risk and order costs. For remote factors, we suggest focusing on: Green Plant Technology, AiYou Technology, NaliTe, West Test, Srei New Materials, Shaanxi Huada, Shanghai Hanxun, Holivor, Xingtuzhihui, and other private/mixed-ownership suppliers. They are deeply embedded in the high-growth chain of commercial aerospace (G60/Blue Arrow, etc.), and although they may have higher volatility, they possess high growth potential. 6. Future Catalyst Outlook: Focus on Key Nodes in 2026-2027 The development of the industry's backend will be accompanied by a series of traceable milestone events, constituting continuous catalysts. ➢ Significant increase in launch density: The second phase of the Hainan commercial aerospace launch site is expected to be completed by the end of 2026, with an annual launch capacity expected to exceed 60 launches. Launches will transition from monthly to regular intervals, which is the basis for revenue recognition in the industrial chain. ➢ Key technology verification nodes: By the end of 2025 and in 2026, multiple privately-owned reusable rockets will conduct their maiden flights or recovery verifications. The success of rocket recovery will become a strong technical catalyst for the sector. ➢ Acceleration of constellation networking and application landing: The number of satellites in orbit for national-level low-orbit internet constellations like GW will continue to grow rapidly. At the same time, the proliferation of smartphones supporting satellite direct connections and application cases of remote sensing data in agriculture, finance, and other industries will continue to emerge, proving the feasibility of the business model. ➢ Landmark events in the capital market: The first batch of purely commercial aerospace companies (such as rocket assembly and satellite operators) is expected to land on the Sci-Tech Innovation Board in 2026-2027, bringing new scarce investment targets and valuations to the sector. ➢ Starship milestone: Each success of SpaceX's Starship (orbital insertion, capture, crewed missions) may stimulate domestic commercial aerospace sentiment, leading related companies to increase their investment in benchmark projects. Source: Guojin Securities