Accelerated earnings growth in 1Q26, with satellite business ramp-up opening the next phase of growth

Overview

This report is Nomura's earnings review of Shenzhen Sunway Communication Co., Ltd. (300136.SS). The company's 2025 and 1Q26 results show accelerating growth, mainly driven by satellite component volume ramp-up, product mix improvement, and operating leverage. The report believes that the satellite business and AI hardware-related opportunities will support the company in entering a multi-year growth phase.

Core views

The core views include: first, 1Q26 revenue and net profit growth were significantly faster than full-year 2025, indicating that an earnings inflection point is taking shape; second, phased-array antenna modules for LEO satellite ground terminals and high-frequency high-speed connectors have achieved structural progress; third, in consumer electronics, the company may enter the supply chain of new AI hardware customers, providing integrated solutions such as antennas, wireless charging, and precision structural components; fourth, although 2026F/2027F EPS was lowered to reflect weaker smartphone demand, the high-margin contribution from the satellite business still supports a higher target price.

Analysis framework

The report updates earnings forecasts and the target price by combining the company's 2025 and 1Q26 financial data, product line progress, satellite customer cooperation, changes in the consumer electronics supply chain, and valuation multiples. Valuation uses the 2026F P/E multiple method, with the historical average P/E and the structural improvement of the satellite business as the basis for the premium.

Methodology notes

• Valuation methods2026F P/E multiple valuation

  Target price based on 86x 2026F P/E

  Nomura sets the target price at CNY87, corresponding to 86x 2026F P/E, higher than the company's 9-year historical average P/E of about 38x; the report believes the satellite business gross margin of about 35%-40% and the revenue mix shift toward higher-value businesses can support valuation re-rating.

• Earnings forecastEPS forecast revision

  Lower 2026F/2027F EPS but maintain positive rating

  The report lowers 2026F/2027F EPS from CNY1.08/CNY1.27 to CNY1.01/CNY1.18, mainly reflecting weaker smartphone demand, but the increased contribution from satellite revenue partly offsets the negative impact.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Shenzhen Sunway Communication Co., Ltd. (300136.SS)

  Covered stock; Nomura maintains Buy rating and raises target price

  Strengths

  Satellite component volume ramp-up, mass shipments of phased-array antenna modules for LEO ground terminals, high-frequency high-speed connectors becoming the second-largest downstream application, product mix improvement, and stronger operating leverage.

  Weaknesses

  Weak smartphone demand led to cuts in 2026F/2027F EPS, and the traditional consumer electronics business still faces cyclical pressure.

  Comparison

  The target price corresponds to 86x 2026F P/E, above the 9-year historical average of about 38x; the report believes the high gross margin of the satellite business and business mix upgrade explain this premium.

  Risks

  Slower-than-expected delivery of satellite products, intensified competition or policy uncertainty, shrinking share with certain customers, and weakening consumer electronics demand.

Key data

• 2025 revenueCNY8,910mn; YoY +1.9%Growth was driven by satellite component volume ramp-up.
• 2025 net profitCNY709mn; YoY +7.1%Gross margin improvement and a lower expense ratio supported profit growth.
• 2025 gross margin22.8%; YoY +1.97pptDriven by a higher contribution from satellite connector business.
• 1Q26 revenueCNY1,992mn; YoY +14.3%Revenue growth accelerated significantly versus full-year 2025.
• 1Q26 net profitCNY105mn; YoY +35.4%Driven by satellite volume ramp-up, operating leverage, and product mix improvement.
• 2026F EPSCNY1.01Down 6% from the previous forecast of CNY1.08.
• 2027F EPSCNY1.18Down 12% from the previous forecast of CNY1.27.
• Target priceCNY87.00Raised from CNY76.00.
• Current priceCNY74.91As of April 17, 2026.
• Implied upside+16.1%Based on target price CNY87 and current price CNY74.91.

Impact & implications

If satellite constellation construction and customer shipments progress smoothly, the company's revenue mix will shift from traditional consumer electronics toward higher-margin, higher-value satellite communications business, driving an improvement in earnings quality and valuation center. However, weak smartphone demand will still weigh on growth in some traditional businesses.

Risks

• Satellite product delivery or constellation construction progress may be slower than expected.
• Intensified competition or policy uncertainty may lead to shrinking share with certain customers.
• Consumer electronics market demand may weaken, especially soft smartphone demand.
• Achievement of the target price depends on earnings forecasts and valuation re-rating; if results fall short of expectations, the target may not be reached.

What to watch

• The pace of mass shipments of phased-array antenna modules for LEO satellite ground terminals.
• Changes in the revenue contribution of high-frequency high-speed connectors in downstream applications.
• The pace of domestic LEO constellation construction and progress in the company's cooperation with operators.
• Progress in supply chain onboarding for new AI hardware customers and small-batch trial production of transparent antennas.
• Whether 2026F revenue, gross margin, and expense ratio validate operating leverage.