1. Company profile and introduction of the company's executive director, chairman and CEO: The company was founded in 2001 and initially mainly engaged in “wireless paging,” “digital cluster communication systems,” and “emergency communication systems,” and gradually evolved into the development, production and sales of “terrestrial satellite mobile communication systems,” and collaborative IPSTAR (IPSTAR) bandwidth leasing and satellite network operation services. The company has more than 300 employees, of which 150 are R&D personnel. The company's research and development is also carried out through cooperation with universities, research institutes, and overseas institutions. Customers mainly include: government administration departments, national law enforcement agencies, transportation, energy, smelting, chemical and other large enterprises. Mr. Wang Zhe'an is the founder, executive director, chairman and CEO of the group. He has 30 years of work experience in the dedicated communications industry and is mainly responsible for the overall corporate strategy, management and operation of the group. Mr. Wang was named one of the “2009 Outstanding New Entrepreneurs in China” and was nominated as the executive director of the China Satellite Users Association in December 2010.

2. Cooperation project between the company and Thaicom: The company bought out the right to use IPSTAR satellite resources in China (including Hong Kong and Macau) at a total cost of 80 million US dollars (no less than 9 and a half years) and changed its name to Cooperative Satellite 1; the satellite service includes bandwidth capacity services, and the right to control and use gateway equipment to support broadband Internet connection transmission and other application solutions. Under equal conditions, the company has priority to assist Thaicom in building the first mobile satellite communication network in Thailand. When Thaicom launches a second satellite in the same orbit, it has the right to give priority to the manufacturer and launch company of the new satellite if certain conditions are met.

3. How is the data from the company's cooperative satellite connected to the Internet, what is the network bandwidth of the satellite data, and how to obtain the company's satellite communication license: the data from the cooperative satellite is connected to the Internet through China Telecom's optical fiber network, and the data transmission protocol uses an IP protocol, which can be seamlessly connected to the Internet. The Syo1 satellite is located at the equator and 195 degrees east longitude, and uses on-demand technology. The network bandwidth after conversion according to the transponder technology used by traditional satellites is 45 GB per second. The company operates using the satellite operating license of China Telecom Satellite Communications Co., Ltd., a subsidiary of China Telecom. Currently, only three satellite operation licenses have been issued in the Chinese market. The other two licenses are operated by Asia Pacific Satellite (1045.HK) controlled by Zhongwei Group and Asia Satellite (1135.HK) controlled by CITIC Group, respectively.

4. The company signed a subscription agreement with CITIC Guotong: The company agreed to issue on September 30, 2013, and CITIC Guotong Investment Management Co., Ltd. has agreed to subscribe for 600,000,000 warrants at a subscription price of HK$0.4. The term of this warrant is 2 years. If CITIC Guotong carries out this subscription, it will hold 8.6% of the company's shares and become a long-term strategic shareholder of the company.

5. Satellite bandwidth leasing business situation: The company is currently the only private enterprise engaged in satellite communication operations in China. Currently, there are 3 companies engaged in satellite communication operations in China: China Satellite Group (corresponding to the listed company Asia Pacific Satellite (1045.HK)), CITIC Group (corresponding to the listed company Asia Satellite (1135.HK)), and China Telecom (corresponding to collaborative communication (1613.HK)). Asia Satellite (1135.HK) and Asia Pacific Satellite (1045.HK) companies own satellite ownership, including operation, maintenance, and depreciation and amortization costs, totaling about 12,000 US dollars/MBps per year, corresponding to a sales price of 30,000 US dollars/MBps per year, with a gross margin of about 60%. Currently, the company has purchased 40% and 36% more bandwidth than Asia Satellite (1135.HK) and Asia Pacific Satellite (1045.HK), respectively. Currently, the market price of the satellite leasing business is about 30,000 US dollars/Mbps per year, and the company's sales price is 25,000 US dollars/Mbps per year. Currently, it has sold 12.5% of the total bandwidth, and it is expected that all bandwidth will be leased externally for 3 years.

6. The cost and cost of the satellite bandwidth leasing business: The company previously purchased the Cooperative Satellite in the form of installment payments and paid Thaicom 8 million US dollars per year, which is equivalent to 700 US dollars/MBPS/year, accounting for about 8% of sales revenue. The company also needs to pay Thaicom 3% of sales revenue for satellite operation and management expenses for satellite operations and license leasing fees of 14% of sales revenue to China Telecom every year. The total cost accounts for about 25% of revenue, and the gross margin is about 75%.

7. The business situation of the terminal communication product “Dynamic Communication”: Currently, the most advanced terminal reception technology for satellite communication in the world is fourth-generation technology, that is, the receiving terminal can rotate in three dimensions without affecting signal transmission. Only the United States has this technology. The company's “Dynamic Communications” product is a third-generation technology. It is a project banned from overseas sales to China. It uses electric scanning, and the receiving terminal moves in a two-dimensional plane without affecting signal transmission. The company obtained this technology from Israel's Gilat Company, incorporated it into its own technology, and obtained a patent. Therefore, currently only one domestic cooperative communication company can implement it. This technology can reduce the antenna length of 160 cm to 40 cm, and the product weight from 200 kg to 20 kg, and can achieve 4M bandwidth transmission, so it can be used in civil aviation, high-speed rail, and fishing. Government (such as management and rescue of China's fishery, etc.).

8. The price situation of “Dynamic Communications” products: Civilian products used in fishery administration have a bandwidth of 256k and a price of 18,000 yuan/set, and commercial products such as high-speed rail, civil aviation, etc., have a bandwidth of 4M, and a price of 250,000 yuan/set.

9. The production capacity of the company's “Dongzhongtong” products: The company will not consider expanding the production capacity of existing “Dongzhongtong” products in the future. The current production capacity is sufficient to meet demand. The company only produces core components, and outsources other parts to other manufacturers using OEM methods.

10. The company previously established a communication network subsidiary for the Beidou system. The specific shareholder structure, and the future development direction of the subsidiary: the company can separate projects combining mobile networks with Beidou technology in order to operate satellite and terrestrial network resources separately, so it can provide convenience for more logistics vehicles, freighters, cruise ships, automobiles, etc., and better improve service quality. The company accounts for 51% of the shareholder structure of this subsidiary (that is, the majority shareholder Wang Zhe'an accounts for more than 20%). The company attaches great importance to this subsidiary and plans to invest considerable resources and capital. Considering that mobile phones are now very popular, the company anticipates that applications using Beidou satellites, such as mobile satellites and mobile Internet, will become a very promising market in the future, so the company has full confidence in this subsidiary.

11. Beidou satellite service: Only after the Beidou satellite system is supported by a high-precision terrestrial positioning enhancement network can it achieve accurate positioning with an error of less than 0.1 meters. Currently, the ground civilian positioning business of the Beidou system is operated by Shanghai Beidou Satellite Navigation Platform Co., Ltd., whose major shareholders are China Akashi Investment Management Group Co., Ltd. (55%) and the Shanghai Space Administration (45%), while Akashi Investment is expected to hold about 16.5% of the company's shares through convertible bonds, making it the company's second largest shareholder. The company said it plans to acquire Shanghai Beidou Satellite Navigation Platform Co., Ltd. in the future. The acquisition method needs to be funded through the issuance of new shares. The exact amount has not yet been determined.

Thailand's Ministry of Science and Technology will invest 2 billion yuan while using China's Beidou technology to build a mobile satellite communication network. The future company cooperates with Thaicom to use advanced satellite systems and terminal technology combined with Beidou satellite technology to create a new generation of mobile satellite communication networks. Countries and organizations that require and cooperate with Beidou include: Pakistan, Mongolia, Myanmar, Australia, APSCO, the Joint Committee of China, Laos, Myanmar, and Thailand, and the United Nations Economic and Social Commission for Asia and the Pacific. Since the Chinese government has now only signed relevant cooperation agreements with the Thai and Pakistani governments and has received support from the Thai government, the company will focus on developing the Thai market first. The company is expected to become the supplier of terrestrial receiving equipment for satellite communications for this project. The order amount is about 1 billion yuan, and it will take three years to complete.

12. Summary and suggestions: The company's unaudited consolidated net profit for the six months ended September 30, 2013 was about HK$32.4 million, an increase of about 51% over the same period last year, mainly due to the increase in sales of terrestrial mobile satellite transmission systems. The company's current PE is about 19 times that, and the company's satellite bandwidth leasing business and the terrestrial terminal receiving product “Dynamic Communication” are highly cost-effective. The company has the technology and capabilities to construct the Beidou satellite navigation system, and the company and the Shanghai Beidou satellite navigation platform have formally signed the “Cooperate One” satellite bandwidth leasing and sales cooperation agreement, further enhancing the company's strength in the development of Beidou. It is recommended to pay attention.