On February 8, 2020, we released the company report “Relying on Tsinghua University's International Leadership in Starlight Sensor Technology, Global Satellite Manufacturing Core Benefit Targets”; on February 10, we invited the company's main executive team to hold an exclusive conference call. For details, please refer to the announcement on the company's investor relations records, and welcome calls. This report is a follow-up report. We believe that the company is not only the core beneficiary target of domestic low-orbit satellite constellation construction, but the biggest difference that distinguishes other companies is that it has participated in the global market. The details are as follows:
The core beneficiaries of domestic low-orbit satellite constellation construction are companies with a domestic market share of 60% or more, which rely on Tsinghua University's core technology and are the first commercially operated space optical sensor company in China. An optical sensor is equivalent to the eye of a satellite and is used for spatial positioning. It is the core component of the attitude control system, one of the most critical subsystems of a satellite. The company's products have been used in the Red Goose constellation and Galaxy Aerospace's first star. Among them, 400,000 of the company's single products were used on the Red Goose constellation, and the company's 2 products were also used on the first 5G satellite launched by Galaxy Aerospace in January. Furthermore, out of 9 domestic satellite manufacturers currently involved in the construction of low-orbit satellite constellations, 7 have used the company's products.
The company may occupy the main market share of domestic low-orbit satellites, with a potential market of 1.6 billion yuan. According to the annual report, the market share of the company's starlight sensor in China in 2018 was 62%. Considering that its competitor 502 is dominated by high-orbit satellites such as Beidou, Tianyin Interstellar's market share in the field of tiny satellites may reach 80%. According to the average use of 2-3 star sensors on a single satellite (experimental star or 1), the total number of domestic satellite constellation construction plans recorded is 2,526 (far less than the plans of US companies such as Space X and One Web). Based on the calculation of the value of a single satellite of 400,000 and 80% of the domestic market share, it is estimated that the market will be increased by 1.6 billion yuan.
The biggest difference that distinguishes other companies is that the company is already participating in the global market. As an industry leader in domestic star sensitive technology, Tsinghua University is leading the world in the performance of its developed products. On the premise that its nano-star sensor NST-4 is far smaller in size and quality than similar products abroad, the performance is still comparable. In the global market, the company's products have now been applied to the US MITRE atmospheric exploration satellite and the European Alpha Global Multimedia Satellite, and has participated in the US One-Web company's stepwise quotation for 200 units. Since low-orbit satellite constellation construction in various countries is currently in full swing, the supply chain represented by SPACE X and ONE-WEB is analogous to the early internal supply of parts in the automobile industry. Once batches are formed, they will enter an open process. It is not ruled out that in the future, mainstream international manufacturers will build domestic factories to find supply chain systems.
Since space products require operating data from satellites in orbit, SkyBank, as one of the few companies in the world, has a high cost performance advantage. Considering the large-scale and low-cost demand for future satellite constellation construction, its potential market share may be around 20%. According to incomplete statistics, the construction scale of foreign constellations has reached 1,7380. According to their 20% market share and relatively higher value, the potential market space is 3.5 billion yuan.
Investment advice: Relying on Tianyin Interstellar, the company leads the world in starlight sensor technology. It is not only the core benefit target of domestic low-orbit satellite constellation construction, but also participates in the global market, and may have greater performance flexibility. Furthermore, the company focused on accelerating the transformation of military electronics in Huaqing Ruida and deepened the industrial chain by successively acquiring intelligence technology, etc.. It is expected that with the construction of national defense informatization, the continuous formalization and release of new products, and expansion into the civilian goods market, the military electronics business will continue to grow rapidly. We expect the company's net profit for 2019-2021 to be 141, 183, and 265 million yuan respectively. The corresponding valuations are 65, 50, and 34 times, respectively, maintaining the “Buy-B” rating.
Risk warning: the pace of low-orbit satellite constellation construction falls short of expectations; military electronic components business orders are slow
