Summary of the report
Event: the company announced on October 15 that the net capital raised by the company through a non-public offering of shares was 2.14 billion yuan (the issue price was 9.60 yuan per share). It will be used for China Star 6D satellite project, China Star 6e satellite project, China Star 26 satellite project and supplementary liquidity.
Recently, the company announced that the company raised a net fund of 2.14 billion yuan through a non-public offering of shares, which will be used for the China Star 6D satellite project, the China Star 6e satellite project, the China Star 26 satellite project and supplementary liquidity. After the satellite construction project is put into use, it will help the company to further strengthen the construction of satellite resources, enhance the company's core competitiveness, and achieve the company's strategic goals.
The company's fixed increase plan at the end of 2020 revealed that China Star 6D satellite is the replacement of China Star 6A, and increased the Ku band resources. China Star 6e satellite is used to replace China Star 6B and adds Ku band multi-beam resources. On the one hand, it can meet the needs of business development in terms of service, coverage and beam, and achieve business continuity and smooth transition. On the other hand, it can also improve the company's communications satellite resources and performance to meet the needs of radio and television customers to develop 8K services in the future. Zhongxing 26 satellite carries Ka band payload, which can carry out the integrated design and layout of satellite and earth, realize the seamless interconnection of large capacity broadband satellite in Ka band with the corresponding ground system, realize the comprehensive landing of its bearing service, further improve the satellite broadband network system of our country, and promote the development of satellite broadband application.
At present, the China Star 6D satellite has been successfully launched in April 2022 and has passed the in-orbit test to the operation and management of the company. The original business of the China Star 6A satellite has basically been transferred to the China Star 6D satellite and operated smoothly. Both Zhongxing 6e and Zhongxing 26 satellites are normally developed and produced in accordance with the satellite construction plan. In addition, the Zhongxing 19 satellite has arrived at the launch site from Beijing, according to the Aerospace Science and Technology Group.
We believe that after the landing of this increase, the promotion of the funds raised by the company to invest in the project will provide the company with operational strength in traditional areas such as domestic satellite radio and television, as well as emerging areas such as high-orbit satellite Internet, and provide an uncertain foundation for the development of satellite communications business during the 14th five-year Plan.
Profitability improved, first-half net profit rate reached a record high since listing. According to the company's semi-annual report on August 31, 2022H1, the company's revenue (1.253 billion yuan, + 1.31%) increased slightly. Under the influence of the reduction in the company's satellite depreciation cost compared with the same period last year, the company's gross profit margin (38.65%) increased slightly, while the company's financial expenses (- 38 million yuan) Compared with 2021H1 reduced by 23 million yuan) significantly decreased, other income (73 million yuan, + 43.54%) rapid growth and other factors, return to the mother net profit (284 million yuan, + 11.16%) achieved a steady growth, net interest rate (29.12% score 3.07pcts) also reached a record high for the same period since the company went public.
In terms of fees, 2022H1, the company's three-fee rate (5.16% memme1.81pcts) has decreased, especially under the influence of the increase in bank deposit interest and the reduction of exchange losses, the company's financial expense rate (- 3.04% memme1.78pcts) has dropped significantly. In addition, the company's R & D expenditure (28 million yuan, + 7.60%) maintained a steady growth, reaching an all-time high since the company went public, mainly due to increased R & D investment.
In terms of cash flow, 2022H1, the net cash flow generated by the company's operating activities (- 36 million yuan,-111.58%) was negative for the first time since listing, mainly due to the increase in the amount paid by the company for transponders.
Overall, the company's 2022H1 revenue growth is steady. With the launch of China Star 19, China Star 26 and China Star 6e satellites in the second half of the year, the company's satellite depreciation cost may increase or have a certain impact on the company's short-term gross profit margin, but the company's net profit margin in 2021 has returned to the levels of 2018 and 2019 before the epidemic, and with the construction of new satellite space infrastructure, we judge. The company's expansion in emerging business markets such as ultra-high-definition satellite radio and television and high-orbit satellite Internet applications (aviation Internet, marine Internet) will be further accelerated, and the growth rate of the company's revenue and net profit volume as well as profitability are also expected to usher in new changes in the middle and later stages of the 14th five-year Plan.
The company's three major business development logic to build future performance acceleration and certainty company is the core professional subsidiary of China Aerospace Science and Technology Group Co., Ltd., which is engaged in satellite operation and service industry. It is the only basic telecom operator in China with independent controllable broadcasting satellite resources, and is listed as a national first-class emergency communications professional guarantee team by the Ministry of Industry and Information Technology, and is the guarantee force for the direct command and dispatching of the national industry competent department.
As the second largest fixed communications satellite operator in Asia and the sixth largest in the world, the company has high-quality communications and broadcasting satellite resources, operates and manages 14 commercial communications and broadcasting satellites, and has satellite transponder resources covering C-band, Ku-band and Ka-band (as of June 30, 2022).
According to the disclosure on the company's official website, the company is building a coordinated development pattern of three main industries: satellite operation services, industry system integration and comprehensive information services, combined with the landing of the company and the development of the company's three main industries, we judge that there is a strong certainty that the company's performance growth will be accelerated in the next few years of the "14th five-year Plan". It is mainly reflected in the fact that the company will enjoy the development dividend of "live satellite TV programs with high definition and ultra-high definition", the demand for system integration in the field of emergency communications is expected to be gradually released, and the expansion of the two major satellite Internet application markets of ocean + aviation will become the company's medium-and long-term revenue growth. Important driving force on the development logic of the three major businesses
① satellite operation services: enjoy the development dividend of "Direct broadcast Satellite TV programs HD and Ultra HD" in the field of satellite operations, the company is the basic guarantee force for the secure transmission of radio and television programs in China. China Star 6B, China Star 6C, China Star 6D, China Star 9, China Star 9B and Asia Pacific 6C and other satellites undertake radio and television satellite signal transmission, providing secure and reliable transmission guarantee for more than 800 sets of radio and television programs in the territory. In the overseas market, the company mainly provides stable and reliable satellite transmission services for local telecom operators, governments and enterprises in Southeast Asia, the Middle East, Africa and other regions.
At present, in the "opinions on further accelerating the Development of High-definition and Ultra-High-definition Television" issued by the State Administration of Radio, Television and Television in June 2022, it is clearly stated that "China will speed up the promotion of high-definition and ultra-high definition of live satellite TV programs." encourage conditional television stations to transmit UHD channel signals through direct broadcast satellites. The high-definition signals of all the channels of the Central Radio and Television headquarters and the main channels at the provincial level should be gradually and fully transmitted through direct broadcast satellites. The timetable also clearly states that "from July 1, 2022, the new TV channels transmitted by direct broadcast satellites should mainly be high-definition and ultra-high-definition channels", and "by the end of 2025, the number of high-definition and ultra-high-definition channels transmitted by direct broadcast satellites will increase significantly" and other plans.
It can be predicted that the development of high-definition and ultra-high definition of live satellite TV programs in China will further accelerate in the next few years of the 14th five-year Plan, and the demand for bandwidth use of live broadcast satellites will continue to grow rapidly. as the only basic telecom operator with independent controllable broadcasting satellite resources in China, the company will fully enjoy this dividend, and the volume of revenue from traditional satellite operation services is expected to improve significantly in the next few years.
② industry system integration: the demand for system integration in the field of emergency communications is expected to gradually release the company is listed by the Ministry of Industry and Information Technology as a national first-class emergency communications professional guarantee team, and is the guarantee force for the direct command and dispatching of the national industry competent departments. In the first half of 2022, the company completed the guarantee of multi-provincial emergency communication network, realized a number of geological hazard monitoring, biodiversity monitoring and other applications, and multi-industries went hand in hand to stimulate new momentum of business development. Xinnuo, a wholly owned subsidiary of the company, has created technologically leading terminal products and solutions to expand the system integration business in many industries. Successfully won the bid for Beijing Emergency Management Bureau emergency mobile command vehicle construction and other emergency projects, formed the emergency vehicle communication integrated solution and integration capability, and enhanced the actual combat experience of emergency rescue.
In February 2022, the State Council comprehensively deployed and issued the National Emergency system Plan for production safety, disaster prevention and relief during the 14th five-year Plan period, which clearly put forward "the construction of a special system for emergency management of high-throughput satellites, the expansion and expansion of the special integrated service system for satellite emergency management, and the strengthening of the equipment and application of advanced technology emergency communications equipment such as high-throughput satellites." It can be seen that in recent years, the state is expected to increase investment in the construction of high-throughput satellite emergency communications application systems, and the demand for system integration in the relevant downstream emergency communications industry is expected to be gradually released. As the existing domestic high-throughput satellite resource operators such as China Star 16 and Asia-Pacific 6D, the revenue of relevant downstream system integration business is also expected to achieve steady growth.
③ comprehensive information service: the expansion of the two major satellite Internet application markets of Ocean + Aviation is expected to become an important driving force for the company's medium-and long-term revenue growth. The company actively promotes the construction of industry application platform, creates characteristic service products, and continuously improves the comprehensive information service capability. Special efforts will be made to build application platforms for marine, aviation and other industries, focusing on the development of "sensible and intelligent" information system integration services, and accelerating the development of comprehensive information services with aerospace characteristics.
Among them, in terms of the marine Internet, the company's "Sea Star" global network service covers more than 95% of the world's sea routes, and the "global network" broadband satellite communication network of the wholly-owned subsidiary Xin Nuo Company has newly realized the expansion and coverage of the South Pacific Ocean. Enhanced global network service capacity. The number of ships in the net continued to grow. In the first half of 2022, the total number of ships on the net exceeded 8200, an increase of 600 compared with the same period in 2021. At the same time, the company has stepped up efforts to promote the construction of "Starcom" comprehensive information service platform, adding "short video" and "easy live broadcast" and other information service products; "Haisingtong" enables intelligent LNG power guard ships to help realize energy-saving, low-carbon, intelligent navigation, transportation and rescue and other new functions of modern shipping.
In terms of aviation Internet, Zhongxing 16, the first Ka high-throughput satellite, covers more than 90% of China's domestic air routes, as well as the central, eastern and offshore areas of our country. In the first half of 2022, the company made a breakthrough in the airborne Ka high-throughput satellite integrated information service business, completed the signing of the cooperation operation agreement with Sichuan Airlines, and the first fleet has been refitted. Sign a cooperation framework agreement with Shandong Airlines to accelerate the progress of the project with Air China. The optimization of various functions of the airborne operation platform has been steadily improved, and the first phase of the platform has been developed and tested in the first half of the year.
In our in-depth report "China Satellite Internet Industry-- the" Blue Ocean "of the stars in the vast universe, we have calculated the market of marine satellite Internet and aviation satellite Internet, and the market space of related industries is expected to exceed 5 billion yuan in the next few years. Although in the short term, under the influence of the epidemic, the volume of revenue from the company's aviation and marine satellite Internet business has not yet formed an important driving force for the overall performance, but based on high-throughput satellite resources such as Zhongxing 16, it has gradually achieved a first-mover advantage in the market expansion of aviation and marine satellite Internet. In the medium to long term, the overall national epidemic can be controlled, and domestic civil aviation and other markets are expected to usher in recovery. With the expansion of the company's high-throughput satellite communication resources such as Zhongxing 26 in the future, the company will expand the marine and aviation satellite Internet based on the current first-mover advantage, and the growth of related business revenue is expected to gradually accelerate and gradually become an important driving force for the company's medium-and long-term revenue growth.
Investment suggestion
We believe that the company is the core professional subsidiary of the Aerospace Science and Technology Group engaged in the satellite operation service industry, and has the national basic telecommunications service operation license and the value-added telecommunications service operation license. at present, it is the only satellite communications operator with communication satellite resources and can be controlled independently, which is worth paying attention to. The specific points are as follows:
① will definitely increase 2.1 billion yuan to land, and China Star 6D, China Star 6e and China Star 26 will not determine the basis for the expansion of satellite communications business during the 14th five-year Plan.
As the only listed company of high-orbit satellite communication operation in A shares, ② has a certain scarcity, at the same time, its profitability improved in the first half of the year, and its net interest rate reached an all-time high since its listing. In ③ 's "14th five-year Plan", there is a strong certainty that the company's performance growth will be accelerated in the next few years, mainly reflected in the development logic of the company's three major businesses, namely, the development dividend of "Live Satellite TV programs HD and Ultra HD", the need for system integration in the field of emergency communications is expected to be gradually released, and the expansion of the two major satellite Internet application markets of Ocean + Aviation will become an important driving force for the company's medium-and long-term revenue growth.
Based on the above point of view, we estimate that the operating income of the company from 2022 to 2024 will be 2.736 billion yuan, 3.181 billion yuan and 3.782 billion yuan respectively, the net profit will be 625 million yuan, 699 million yuan and 797 million yuan respectively, and the EPS will be 0.16,0.17,0.19 yuan respectively.
Rating, the target price is 15.10 yuan, corresponding to 97 times, 91 times and 80 times PE respectively.
Risk hint
There are certain risks in satellite launch; the epidemic affects the expansion of the company's satellite Internet market.