Company announcement: the company released its annual report in 2019, with annual revenue of 2.734 billion yuan, an increase of 1.49% over the same period last year, and a net profit of 446 million yuan for shareholders belonging to the parent company, an increase of 6.73% over the same period last year. The net profit for shareholders of the parent company after deduction was 408 million yuan, down 6.48% from the same period last year.

The performance is in line with expectations and maintains a steady growth trend. The company achieved revenue of 2.734 billion yuan in 2019, an increase of 1.49% over the same period last year, a net profit of 446 million yuan, an increase of 6.73% over the same period last year, and a comprehensive gross profit margin of 39.88%, a decrease of 4.07% over the same period last year. Of this total, 2019 Q4 realized revenue of 802 million yuan, an increase of 7.76% over the same period last year, and a net profit of 140 million yuan, down 16.57% from the same period last year By the end of 2019, the company's total assets were 18.157 billion yuan and the asset-liability ratio was 15.68%. From a regional point of view, the company achieved revenue of 1.787 billion yuan in 2019, an increase of 5.9% over the same period last year, with a gross profit margin of 39. 5%.

21%, down 1.92 pct from the same period last year; in overseas areas, revenue reached 947 million yuan, down 5. 5% from the same period last year.

9%, and the gross profit margin was 41.16%, down 1.92pct from the same period last year. In terms of expenses, the company's sales expense rate in 2019 was 1.9%, a year-on-year decrease of 0.03pct, and the management expense rate was 7.07%, an increase of 0.51pct over the same period last year, of which R & D expenses were 75 million yuan, an increase of 39.85% year-on-year, and financial expenses were-31 million yuan, an increase of 64.94% over the same period last year. On the whole, there are two main reasons for the company's revenue growth, one is the addition of domestic customers, the other is the increase in the company's high-throughput business, and the main reason for the decline in gross profit margin is the intensification of competition in the overseas market. the substantial increase in financial expenses was mainly affected by large exchange earnings and maintained a steady growth trend in 2019.

Strengthen the capacity of resources and increase the intensity of market development. In 2019, the company successfully launched the China Star 6C satellite and incorporated it into the resource management of dedicated radio and television satellites. The company has successfully completed the Asia-Pacific Satellite 5 derailment mission. By the end of 2019, the company has operated 15 commercial communication and broadcasting satellites. The transponder band resources include C band, Ku band and Ka band, among which there are about 520 satellite transponders in C band and Ku band and 26 spot beams in Ka band. Satellite communications and broadcasting signals cover the whole of China, Australia, Southeast Asia, South Asia, the Middle East, Europe, Africa and other regions. In terms of market development, the coverage of some provincial satellite TV and education stations in the South China Sea and the backup of village-to-village access business have been realized. While maintaining the stability of the overseas market, vigorously developing new markets in Southeast Asia, Europe and other regions has not only successfully acquired new business users, but also realized the expansion of key projects. Three new beams in the international sea areas of the Southeast Pacific, the eastern Indian Ocean and the western Indian Ocean have been added, and the coverage of global sea routes has been increased to 95%. We will steadily promote the construction of application platforms in the industry, rely on the business brand of "Starcom", and keep a close eye on the key markets on board. The scale of users is constantly expanding, and the number of ships on the net exceeds 6000.

The high-throughput satellite-driven satellite service industry is growing rapidly. The communication satellite operation industry belongs to the satellite service industry, which is a capital-intensive industry with large capital investment and low marginal cost.

From the perspective of the international market, due to the progress of satellite technology, the increase in satellite supply, and the fierce market competition, there are more than 40 major fixed communication satellite operators in the world by the end of 2017; from the domestic market, only three domestic companies have the qualification for satellite operation, and the company is the only satellite communications operator with satellite resources, with a high domestic market share. In the future, high-throughput satellites will become an important development trend in the industry. compared with traditional communication satellites, high-throughput satellites have advantages in capacity and unit bandwidth cost. it has broader competitiveness and application prospects in broadband access, satellite relay stations, mobile communications, broadcast communications and so on. We believe that, from the demand side, the future high-definition programs on the satellite and "moving ZTO Express" and other new demand will drive the satellite communications industry to accelerate development.

Investment suggestion: as the only satellite communication operator with self-controllable commercial communication and broadcasting satellite resources in China, the company has high-quality communication satellite resources and rich frequency orbit resources. with international advanced, independent and controllable satellite Internet application service capability, high market share. With the construction and operation of high-throughput satellites in the future, it will bring new space for the company's performance growth. We expect the company's net profit from 2020 to 2022 to be 477 million yuan / 509 million yuan / 545 million yuan respectively, with an EPS of 0.11 and 0.12, respectively, maintaining the "overweight" rating.

Risk reminder events: the risk of overseas operation; the risk that the expansion of high-throughput satellite market does not meet expectations; the risk of competition between different means of communication; the risk of macroeconomic cycle fluctuation; the systemic risk of market