Nomura maintains a Buy rating on Sunway Communication and raises the target price to CNY138

Overview

Nomura’s report focuses on the incremental opportunities for Shenzhen Sunway Communication Co., Ltd. (300136.SZ) along two main themes: satellite communication and consumer electronics. The report believes that faster deployment of China’s satellite internet, progress in AI hardware devices for U.S. customers, and order as well as customer expansion at the MLCC subsidiary will jointly improve the company’s product mix and support upward revisions to earnings forecasts and valuation.

Core views

The core views are: first, Chinese satellite constellations such as Spacesail/G60 and GW are entering a high-frequency launch phase, and as a supplier of satellite communication-related components, the company is expected to benefit from a higher contribution of high-margin business; second, AI hardware devices for U.S. customers may bring new component qualification requests and subsequent mass-production supply; third, the MLCC subsidiary shows strong revenue and order momentum, and if the company gradually increases its stake in 2H 2026 to 2027, this may signal management’s confidence in the earnings outlook.

Analysis framework

The report mainly forms its investment conclusion based on industry research, judgment on satellite launch cadence, expectations for customer qualification and supply timing, upward revisions to earnings forecasts, and P/E multiple valuation. The valuation uses 2028F P/E, with the structural improvement in the product mix brought by high-margin satellite business serving as the basis for the valuation premium.

Methodology notes

• Valuation methodsP/E multiple valuation

  86x 2028F P/E

  The target price of CNY138 is based on 86x 2028F P/E, equivalent to +3.0 standard deviations above the 9-year historical average P/E of 39x; the report believes that 2025-28F earnings CAGR is 29%, and that the business mix is shifting toward high-margin satellite communication, which can support this valuation premium.

• Fundamental researchIndustry research and catalyst tracking

  Satellite launch cadence, customer qualification, AI hardware mass production

  By tracking China’s satellite constellation launch plans, component qualification requests from U.S. customers, the timing of AI hardware mass production, and MLCC order trends, the report judges that the company’s revenue and profit mix may improve.

Asset mapping & comparison

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

• 300136.SZ / Shenzhen Sunway Communication Co., Ltd.

  The covered name in the report, an A-share technology and consumer electronics company.

  Strengths

  Has capabilities in antennas and modules, wireless charging, EMI/EMC, precision connectors, acoustic devices, and satellite communication-related components; may benefit from accelerated deployment of Chinese satellite constellations, increased AI hardware content for U.S. customers, and MLCC order growth.

  Weaknesses

  The traditional consumer electronics business may face margin compression, and earnings growth depends on new customer qualification, mass-production timing, and the progress of satellite deployment.

  Comparison

  The report believes the company is shifting from a consumer electronics revenue base under margin pressure toward a higher-value, more diversified revenue mix anchored by satellite communication.

  Risks

  Satellite product delivery or constellation construction may be slower than expected, competition may intensify, policy uncertainty may arise, and consumer electronics demand may weaken.

• MLCC subsidiary

  A growth business under the company, with the report mentioning its revenue growth and order momentum.

  Strengths

  Order momentum is relatively strong, and samples have already been sent to new customers, in line with its premiumization strategy.

  Weaknesses

  Further observation is still needed on new customer onboarding, mass production, and progress in increasing the company’s ownership stake.

  Comparison

  Compared with traditional consumer electronics components, the MLCC subsidiary may provide a new source of growth and product mix improvement.

  Risks

  Order sustainability, conversion rate of new customers, and progress of premiumization may fall short of expectations.

Key data

• RatingBuyNomura maintains its Buy rating.
• Target priceCNY138Raised from CNY87.
• Current priceCNY103.65 (2026-06-08)Price disclosed in the report.
• Potential upside33.1%Estimated based on the target price of CNY138 and the current price of CNY103.65.
• 2026-27F EPSCNY1.03 / CNY1.35Raised from CNY1.01 / CNY1.18.
• 2028F EPSCNY1.60The report states that the current price corresponds to 65x 2028F P/E.
• Target valuation multiple86x 2028F P/EEquivalent to +3.0 standard deviations above the 9-year historical average P/E of 39x.
• 2025-28F earnings CAGR29%The report attributes this to growth in the satellite segment and product mix improvement.
• Gross margin of satellite business35-40%The high-margin satellite business is an important basis for valuation re-rating.
• China satellite launch cadenceTotal launches in 2026 may exceed 300 satellitesSpacesail/G60 full-year launches may exceed 200 satellites, and the GW constellation is expected to take over from July.

Impact & implications

If satellite internet deployment and AI hardware supply progress as expected, Shenzhen Sunway Communication’s revenue mix may shift from traditional consumer electronics toward a higher-value, higher-margin, and more diversified combination of satellite communication and AI terminal components, thereby leading to upward earnings revisions and valuation re-rating. From an investment perspective, the report views satellite launch cadence, higher content value for U.S. customers, and MLCC orders as key catalysts over the next 12 months.

Risks

• Satellite constellation construction or satellite product delivery progress may be slower than expected.
• Intensifying competition or policy uncertainty may lead to a decline in share among certain customers.
• Consumer electronics market demand may weaken.
• Earnings forecasts, target price, and valuation re-rating may fail to materialize due to macroeconomic or company fundamental changes.

What to watch

• The intensive launch cadence of the Spacesail/G60 constellation in June-July 2026 and the full-year number of launches.
• The progress of high-frequency launches of the GW constellation after July 2026, and whether second-generation satellite tenders are finalized.
• The progress of component qualification for AI hardware devices from U.S. customers, mass-production supply by the end of 3Q 2026, and launch timing in 4Q.
• Revenue growth, order momentum, progress in sample delivery to new customers, and execution of the premiumization strategy at the MLCC subsidiary.
• Whether the company increases its stake in the MLCC subsidiary in 2H 2026 to 2027.
• Whether the gross margin and revenue contribution of the satellite business are sufficient to support the valuation premium.