China's LM-10B net-capture recovery ushers in an engineering phase for reusable rockets

Overview

This report focuses on the industry significance of China LM-10B rocket first-stage sea net-capture recovery. Nomura believes that this mission is not only a single technical breakthrough, but a signal that China's reusable rockets are moving from validation stage to engineering application stage. As launch costs fall and launch capacity bottlenecks ease, constellation construction for projects such as Guowang and Qianfan may accelerate, driving order growth for rocket, satellite, and ground-equipment supply chains.

Core views

The core view is that the true investment test for rocket reusability is not the headline event of whether recovery succeeds once, but whether it can form high-frequency, reliable, and low-cost reflown capability. China has achieved a breakthrough in one-off first-stage recovery, but still has a gap to SpaceX in cumulative launches, reflights, engine thrust-to-weight ratios, and high-turnover operations. Nomura expects that in the industry clearing process during 2027-2029, a greater than 30% cost advantage of reusable rockets versus expendable rockets will become a key competitive factor.

Analysis framework

The report uses a combination of technology-route comparison, unit launch cost decomposition, industry interviews, and company valuation: it first compares recovery routes such as landing-leg vertical recovery, parachute splashdown, tower capture, and net-capture recovery; then compares SpaceX, LM-10B, and current China launch prices on a per-kilogram basis; finally it maps findings to ratings and valuations of listed companies in satellite communications and satellite manufacturing.

Methodology notes

• Industry technology route comparisonComparison of first-stage recovery routes

  Compares differences in payload loss, impact-point precision, sea-recovery suitability, and engineering complexity across landing-leg, parachute splashdown, tower capture, and net-capture recovery.

  Nomura believes net-capture recovery shifts the buffering structure from the rocket to the recovery ship, avoiding extra dead mass from landing legs and being more practical for rolling deck operations at sea.

• Cost curve analysisPer-kilogram launch cost and first-stage reuse economics

  Uses cost per kilogram, first-stage hardware cost share, reflighting count, and turnaround time to measure the commercial value of reusable rockets.

  The report states that the first stage accounts for 60%-65% of total rocket cost, and LM-10B targets CNY20,000/kg, with net-capture aiming to raise payload by 10%-15% while achieving about 72-hour turnaround and more than 10 reuse cycles.

• Relative valuationP/E and P/S target-price valuation

  Shenzhen Sunway Communication target price is based on 2028 P/E of 86 times; China Spacesat Co. target price is based on 2028 P/S of 10 times.

  Shenzhen Sunway Communication’s valuation support comes from expected 29% compound profit growth for 2025-2028 and business mix improvement from satellite communications; China Spacesat Co.’s valuation support comes from expected 16% compound sales growth for 2025-2028 and expansion of the LEO satellite market.

Asset mapping & comparison

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

• Shenzhen Sunway Communication (300136 CH)

  Nomura covers and rates it as Buy; expected to benefit from faster Chinese satellite deployment and improved mix in satellite-communications products.

  Strengths

  Expected compound profit growth of 29% for 2025-2028; business is expected to shift from consumer electronics toward a higher-value and more diversified satellite communications portfolio.

  Weaknesses

  Valuation already reflects elevated growth expectations and the company remains sensitive to consumer electronics demand fluctuations.

  Comparison

  Compared with pure satellite manufacturing peers, its investment logic is more oriented toward the satellite communications chain and product mix upgrades.

  Risks

  Satellite product delivery slower than expected, intensifying competition, policy uncertainty, and weaker consumer electronics demand.

• China Spacesat Co. (600118 CH)

  Nomura covers and rates it Neutral; it is a direct beneficiary of LEO satellite deployment and overseas business expansion.

  Strengths

  Growth in the LEO satellite market, progression of constellation projects, and a rising share of application business could support valuation repricing.

  Weaknesses

  The business may move from satellite manufacturing toward a more application-oriented high-value mix, but high valuation still limits upside.

  Comparison

  Compared with Shenzhen Sunway Communication, China Spacesat Co. is more directly exposed to satellite manufacturing and constellation deployment, but its rating is more conservative.

  Risks

  Downstream demand below expectations, slower-than-expected progress in aerospace technology, macro and policy risks, and intensifying industry competition.

• SpaceX / Falcon 9

  Serves as the main global benchmark for reusable rocket cost and reflighting capability, and is not within Nomura’s regular rated coverage set.

  Strengths

  Launch scale, mission success rate, reflighting count, unit cost, and engine performance are all industry-leading.

  Weaknesses

  Engineering challenges remain in Starship testing, including booster recovery re-ignition.

  Comparison

  China is estimated to be about 10 years behind SpaceX, but demonstrated domestic technology routes may shorten catch-up time.

  Risks

  If SpaceX continues to iterate with higher frequency and higher-cost investment, the domestic catch-up gap could widen.

• Rocket Lab (RKLB US)

  Referenced as an example of parachute splashdown recovery route and is not rated.

  Strengths

  Represents a recoverable small-rocket route other than vertical landing.

  Weaknesses

  The report does not provide cost or high-frequency reuse-advantage evidence compared with net-capture or landing-leg routes.

  Comparison

  Used for technology-route comparison against SpaceX landing-leg route, China net-capture route, and Starship tower-capture route.

  Risks

  The report does not provide investment risk analysis specifically for RKLB.

Key data

• LM-10B recovery event date2026-07-10CASC announced that LM-10B launched from Hainan Commercial Launch Site and completed controlled sea recovery of the first stage about six minutes after first-stage and second-stage separation.
• First-stage cost share of full rocketabout 60%-65%The report believes first-stage reuse is core to reducing launch costs and increasing launch frequency.
• SpaceX Falcon 9 cost benchmarkabout USD2,500-3,500/kg; disclosed basis around USD2,700/kgBased on Nomura industry research and SpaceX-related disclosures.
• Current China launch priceabout CNY60,000/kg, about USD8,400/kgAbout three times Falcon 9 disclosed cost.
• LM-10B target costabout CNY20,000/kg, about USD2,800/kgNet-capture recovery is expected to eliminate landing legs, increase payload by 10%-15%, and target a turnaround of about 72 hours with over 10 reuses.
• SpaceX Falcon 9 launch recordabout 620 launches, mission success rate above 99%, up to 34 reflights per boosterThe report says certification has extended to 40 times, and 50-60 is considered feasible.
• Shenzhen Sunway Communication rating and target priceBuy, target CNY138, current CNY99.38Target price based on 2028 P/E of 86 times.
• China Spacesat Co. rating and target priceNeutral, target CNY80, current CNY90.02Target price based on 2028 P/S of 10 times.

Impact & implications

If LM-10B net-capture can move from single-event success to high-frequency, reliable reuse, China’s domestic launch cost curve will shift lower, constellation deployment pace may accelerate, and satellite communications, satellite manufacturing, ground equipment, and application services chains will benefit. From an investment perspective, it is important to distinguish between a one-off technology event and sustainable commercialization capability, with emphasis on verifying reflighting frequency, unit costs, order realization, and listed-company profit conversion.

Risks

• A one-time recovery success does not equal formation of high-frequency reliable reuse; subsequent industrialization, reflight certification, and maintenance costs still need verification.
• Significant gaps remain between China and SpaceX in cumulative launches, reflight counts, engine performance, and high-turnover operational capability.
• If constellation deployment is slower than expected, order growth for rockets, satellites, and ground equipment may be weakened.
• Policy uncertainty, macro-environment changes, and intensified industry competition may affect profit realization across the aerospace supply chain.
• Shenzhen Sunway Communication faces risks from delayed satellite product delivery, some customer-share contraction, and weakening consumer electronics demand.
• China Spacesat Co. faces risks from downstream demand below expectations, slower-than-expected aerospace technology progress, and valuation constraints.

What to watch

• Whether LM-10B can achieve more than 10 reuses and the target ~72-hour turnaround after follow-up launches.
• Whether domestic reusable rockets’ launch cost per kilogram converges toward CNY20,000/kg or into the Falcon 9 cost range.
• Deployment pace of Guowang and Qianfan constellations, associated launch orders, and satellite manufacturing order realization.
• Whether domestic reusable rockets can maintain more than 30% cost advantage over expendable rockets versus one-off rockets in 2027-2029.
• Continued changes in reflighting capability, engine performance, and unit cost for SpaceX Starship and Falcon 9.
• Whether Shenzhen Sunway Communication and China Spacesat Co. achieve profit, sales growth, and business mix improvements consistent with target-price assumptions.