Global national security demand drives SAR satellite capacity expansion and overseas growth, with Synspective as Nomura's top pick

Overview

The report examines how global demand for national security-related satellites affects three Japanese space services companies. Nomura believes that rising SAR satellite demand, expanding production capacity, and the realization of overseas contracts will drive growth at Synspective and QPS Holdings, while Sky Perfect JSAT's security services, optical satellites, and new space businesses will also expand. Buy ratings are maintained on all three companies, with Synspective as the top pick.

Core views

The report first notes that global demand for SAR satellites used for national security is growing and that both Japanese SAR satellite operators have begun expanding their production systems. QPS Holdings released a medium-term management plan in July 2026 to increase annual production from the current 10 satellites to 20; Synspective announced in August 2026 that it would raise annual production capacity from the current 12 satellites to at least 30 beginning in 2028. Because small SAR satellites can form large constellations and continuously provide Earth observation data, production capacity, the number of satellites in orbit, and the ability to secure government security projects constitute the key foundations for revenue expansion. Synspective is Nomura's top pick among space services companies. The company estimates that the market needs at least 60 SAR satellites and is simultaneously negotiating with more than ten countries worldwide, planning to sign contracts in Asia first before pursuing multiple projects in Europe. It has overseas subsidiaries in Singapore, the US, and Germany, giving it a lead in overseas market development. Nomura expects the company may operate more than 20 satellites by 2028, with overseas sales beginning to rise around that time; by 31/12, its in-orbit SAR satellite fleet is expected to reach 70, with overseas sales accounting for 42%. The signing of overseas national security contracts is viewed by the report as a potential share price catalyst. Synspective's target price is based on 31/12 forecasts. Nomura believes that the number of satellites in orbit, Ministry of Defense PFI project revenue, and overseas sales will all increase significantly by then and forecasts 27% adjusted EBITDA growth in 31/12. For reference, the Russell/Nomura Small Cap (excluding financials) average EV/EBITDA based on 29/3 forecasts is 7.9x; assuming 4% EBITDA growth from 30/3, its forecast multiple for 32/3 is 7.0x. Given that only about five companies globally develop and operate large constellations of small SAR satellites, Nomura believes Synspective can remain globally competitive. It therefore applies an 8.0x adjusted EV/EBITDA multiple to 31/12 forecasts, deriving a target price of ¥2,113 and maintaining its Buy view. QPS Holdings released a medium-term plan through 31/5 in July 2026, targeting the operation of at least 36 SAR satellites by the end of 31/5 and an increase in annual production capacity from 10 satellites to 20. The company's guidance for 31/5 calls for sales of ¥30.0bn, customized EBITDA of ¥20.0bn, and operating profit of ¥3.0bn; Nomura's corresponding forecasts are ¥33.1bn, ¥21.3bn, and ¥6.1bn, respectively. Nomura further expects the company to operate 51 SAR satellites by the end of 32/5 and generate ¥15.0bn in overseas sales in 32/5. QPS Holdings has also secured Ministry of Defense proof-of-concept projects involving real-time processing of satellite data and high-speed transmission to other satellites, which Nomura expects to be commercialized beginning in 30/5. Its valuation is based on 32/5, by which time Nomura expects Ministry of Defense PFI business revenue to increase as the number of satellites in orbit reaches 45, adjusted EBITDA to grow 16% in 32/5, and profit growth to remain stable in 33/5 and beyond. The Russell/Nomura Small Cap Index EV/EBITDA based on 29/3 forecasts is 7.7x; assuming a 4% EBITDA CAGR beginning in 30/3, its forecast multiple for 32/3 is 6.8x. Nomura applies a 7.5x adjusted EV/EBITDA multiple to its 32/5 forecasts for QPS Holdings, deriving a target price of ¥3,415 and reiterating its Buy rating. Facing competition from low-Earth-orbit communications satellites in the enterprise satellite data communications market, Sky Perfect JSAT plans to improve the price competitiveness of large geostationary communications satellites. Nomura expects security services to rise from 27% of Space Business sales in 27/3 to 44% in 32/3, driven by sales of low-Earth-orbit observation satellite imagery, commissions from satellite image sales, ground station operating revenue, and K-band high-speed, high-capacity satellite communications services. Satellite optical data relay, commercial space situational awareness (SSA), and space domain awareness (SDA) satellite operation support are also expected to contribute Ministry of Defense revenue in the 2030s. Sky Perfect JSAT lacks major domestic competitors in Japan's large geostationary satellite operations market, has strong profitability, and maintains long-term contracts with most customers. Imagery from 10 low-Earth-orbit optical satellites is expected to begin contributing to sales in 28/3, and the company also plans to operate four new large geostationary satellites during 2027—2029. Nomura expects a 12% EBITDA CAGR during 27/3—32/3 as price competitiveness improves and national security demand is developed, with 11% year-on-year growth in 32/3; its 32/3 EBITDA forecast is ¥99.0bn. Given that the optical satellite constellation and large geostationary satellites will make full-year contributions by then, and that private-sector and national security space demand is expected to continue growing in the 2030s, Nomura applies a 9.0x EV/EBITDA multiple, above its estimated 8.3x level for the Russell/Nomura Large (excluding financials), deriving a target price of ¥3,662 and reiterating its Buy rating.

Analysis framework

Nomura begins with the rise in global national security demand and compares the development paths of the three companies in terms of satellite production capacity, number of satellites in orbit, overseas presence, and government projects. It then translates satellite counts, project commercialization, overseas sales mix, and changes in business structure into sales and EBITDA forecasts. Finally, it bases valuations on adjusted EV/EBITDA in future mature years and determines target multiples and target prices by referring to Russell/Nomura Index multiples, the number of industry participants, and expected growth rates.

Methodology notes

• Valuation MethodEV/EBITDA valuation

  Calculate target prices using future-year adjusted EV/EBITDA

  The report selects future fiscal years in which each company's satellite deployment and new business contributions are relatively mature, multiplies forecast EBITDA by an appropriate EV/EBITDA multiple, and converts the result into a target share price. The multiples applied to the three companies are 8.0x, 7.5x, and 9.0x, respectively.

• Industry/Sector Analysis FrameworkSupply-demand framework

  Matching national security demand with SAR satellite supply capacity

  The report treats global national security demand, potential satellite requirements, and government projects as the demand side, and annual production capacity, launch schedules, and the size of in-orbit constellations as the supply side, using these factors to determine when revenue growth can materialize.

• Industry/Sector Analysis FrameworkIndustry Concentration Analysis

  A limited number of operators run large constellations of small SAR satellites globally

  The report notes that only about five companies globally can develop and operate large constellations of small SAR satellites. Based on this, it concludes that Synspective and QPS Holdings are likely to remain globally competitive and uses this as support for their valuation multiples.

Asset mapping & comparison

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

• Synspective (290A.T)

  Benefits from global national security demand for SAR satellites, production capacity expansion, and overseas contract growth in Asia and Europe, making it the report's top pick.

  Strengths

  Has overseas subsidiaries in Singapore, the US, and Germany and is negotiating with more than ten countries; the number of operators of large constellations of small SAR satellites globally is limited.

  Weaknesses

  Revenue growth depends on satellites being launched on schedule, forming an in-orbit constellation, and securing overseas national security contracts.

  Comparison

  Compared with QPS Holdings, Synspective leads in overseas market development and also has a higher planned annual production capacity of at least 30 satellites beginning in 2028.

  Risks

  Launch schedules determined by rocket companies may cause delays; low-Earth-orbit satellite failures are difficult to repair, and actual service lives may be shorter than five years; there is also a risk of component performance degradation similar to that observed in satellite No. 4.

• QPS Holdings (464A.T)

  Benefits from SAR satellite production expansion, Ministry of Defense PFI imagery procurement, and commercialization of satellite data real-time processing and high-speed transmission projects.

  Strengths

  Plans to double annual production capacity to 20 satellites and has been selected as a Ministry of Defense SAR satellite imagery data supplier.

  Weaknesses

  The value of Ministry of Defense orders has not yet been disclosed, and the actual business scale may differ from Nomura's assumptions.

  Comparison

  The company's 31/5 operating profit guidance is ¥3.0bn, below Nomura's ¥6.1bn forecast; its valuation applies a 7.5x adjusted EV/EBITDA multiple.

  Risks

  The scale of the Ministry of Defense PFI business may be lower than expected; the company ceased operations of satellites No. 5 and No. 6 in 2024 due to failures, and unexpected satellite failures may occur again.

• Sky Perfect JSAT (9412.T)

  Benefits from growth in national security services, low-Earth-orbit optical imagery, large geostationary satellites, and new businesses such as SSA and SDA.

  Strengths

  Japan lacks other major geostationary satellite operators; the company is profitable and has long-term contracts with most customers.

  Weaknesses

  Enterprise satellite data communications face competition from low-Earth-orbit communications satellites, while the traditional multichannel subscription business also faces subscriber diversion to streaming services.

  Comparison

  Nomura applies a 9.0x EV/EBITDA multiple, above its estimated 8.3x level for the Russell/Nomura Large (excluding financials), reflecting higher growth and competitive positioning.

  Risks

  Subscriber numbers may decline faster due to competition from paid and free smartphone streaming services; technological innovation may trigger price competition in the space and satellite businesses.

Key data

• Synspective Annual Production CapacityCurrently 12 satellites, increasing to at least 30 beginning in 2028The company announced its capacity expansion plan in August 2026
• Synspective Potential DemandAt least 60 SAR satellitesThe company's assessment of national security-related market demand
• Synspective In-Orbit Satellite ForecastMore than 20 satellites in 2028; reaching 70 in 31/12Nomura forecast
• Synspective Overseas Sales Mix42% in 31/12Nomura expects overseas sales to rise beginning in 2028
• Synspective Valuation8.0x adjusted EV/EBITDA; target price ¥2,113Based on 31/12 forecasts, with adjusted EBITDA expected to grow 27%
• QPS Holdings Annual Production CapacityIncreasing from 10 satellites to 20Target in the July 2026 medium-term management plan
• QPS Holdings Company PlanAt least 36 satellites in orbit by the end of 31/5; sales of ¥30.0bn; customized EBITDA of ¥20.0bn; operating profit of ¥3.0bnCompany medium-term management plan guidance
• QPS Holdings Nomura Forecast31/5 sales of ¥33.1bn; EBITDA of ¥21.3bn; operating profit of ¥6.1bnAll are Nomura forecasts for 31/5
• QPS Holdings Long-Term Forecast51 satellites in orbit by the end of 32/5; overseas sales of ¥15.0bnNomura forecast
• QPS Holdings Valuation7.5x adjusted EV/EBITDA; target price ¥3,415Based on 32/5 forecasts, with adjusted EBITDA expected to grow 16%
• Ministry of Defense Satellite Imagery PFI BudgetCumulative five-year total of ¥283.2bnPrimarily used to procure SAR satellite imagery
• Sky Perfect JSAT Security Services MixRising from 27% in 27/3 to 44% in 32/3Share of Space Business sales
• Sky Perfect JSAT Satellite Deployment10 low-Earth-orbit optical satellites; 4 additional large geostationary satellites during 2027—2029Optical satellite imagery is expected to contribute to sales beginning in 28/3
• Sky Perfect JSAT EBITDA Growth12% CAGR during 27/3—32/3; 11% year-on-year growth in 32/3; 32/3 forecast of ¥99.0bnNomura forecast
• Sky Perfect JSAT Valuation9.0x EV/EBITDA; target price ¥3,662Based on 32/3 forecasts, referencing a large-cap index valuation of 8.3x

Impact & implications

The report believes that national security demand is shifting satellite companies' growth focus from merely deploying constellations to expanding production capacity, securing government contracts, and growing overseas sales. Synspective's overseas presence and larger capacity expansion plan place it in the lead; QPS Holdings' growth depends on the scale of Ministry of Defense PFI projects and the commercialization of technology demonstrations; Sky Perfect JSAT is expected to offset pressure from its traditional media business and communications competition by increasing the share of security services within its Space Business.

Risks

• Synspective's satellite launches depend on rocket company schedules, potentially causing delays and reducing the medium-term number of satellites in orbit below assumptions.
• Low-Earth-orbit satellites are designed for a five-year life, but failures in space are difficult to repair, and actual service lives may be shorter than five years.
• Synspective may again experience component performance degradation similar to the issue with satellite No. 4.
• Although QPS Holdings has been selected as a Ministry of Defense imagery supplier, order values have not been disclosed, and the actual business scale may differ from Nomura's assumptions.
• QPS Holdings ceased operating satellites No. 5 and No. 6 in 2024 due to failures, and there remains a risk of unexpected satellite failures in the future.
• Sky Perfect JSAT's multichannel subscription business may experience greater-than-expected subscriber losses due to competition from paid and free smartphone streaming services.
• Technological innovation may intensify price competition in Sky Perfect JSAT's space and satellite businesses, although the report believes this risk is not material given the limited number of service providers in Japan.

What to watch

• Watch whether Synspective can first sign national security contracts in Asia and subsequently secure multiple projects in Europe.
• Watch Synspective's expansion to annual production capacity of at least 30 satellites beginning in 2028 and whether its in-orbit satellite fleet can reach 70 in 31/12.
• Watch whether QPS Holdings can achieve annual production capacity of 20 satellites and its medium-term target of at least 36 satellites in orbit by the end of 31/5.
• Watch the value of QPS Holdings' Ministry of Defense PFI orders and whether its real-time data processing and inter-satellite high-speed transmission projects can be commercialized beginning in 30/5.
• Watch whether Sky Perfect JSAT's 10 low-Earth-orbit optical satellites can begin contributing to sales in 28/3 and whether four large geostationary satellites can commence operations as planned during 2027—2029.
• Watch whether security services can increase from 27% of Sky Perfect JSAT's Space Business sales in 27/3 to 44% in 32/3.