Raise profit forecasts, maintain target prices, and maintain holdings growth ratings. The company announced its 2023 annual performance forecast. The net profit is expected to be -370 million yuan, and the profit improvement is better than previously anticipated. For this reason, we raised the 2023-2025 net profit attributable to the parent company to -3.67 (+19.89%) /0.48 (+0.00%) /5.00 (+0.00%) billion yuan, corresponding to the EPS increase to -0.11 (+15.38%) /0.15 (+0.00%) yuan. Maintain the target price of $10.82 and maintain the increase in holdings rating.

The loss reduction slightly exceeded expectations, deepening cost reduction and efficiency. The company predicts that it will achieve net profit of about -370 million yuan in 2023. Compared with the estimated loss reduction amount of 303 million yuan for the same period, a year-on-year loss reduction of 45.09%. Net profit after deducting non-return to mother was about -550 million yuan, a year-on-year loss of about 268 million yuan, and a year-on-year loss reduction of 32.43%.

The company's profitability continues to improve, mainly benefiting from the company's increased market development. Wireless main equipment, base station antennas, and new business revenue continue to grow. At the same time, the company continues to deepen cost reduction and efficiency, and profitability gradually improves.

The satellite industry continues to catalyze, focusing on the development of the low-orbit satellite business. On January 10, 2024, SpaceX officially announced the successful use of Starlink satellites to send SMS. According to the official website, SpaceX's direct-connected mobile phone business can work with existing mobile phones, that is, it can seamlessly connect text, voice, and data without changing hardware. The business is expected to send SMS in 2024, voice calls and web browsing, and connect to IoT devices in 2025. Technology in the overseas satellite industry is developing rapidly, and attention is being paid to the development opportunities of the domestic low-orbit satellite industry chain.

Catalysts: The share of main equipment continues to increase, domestic low-orbit satellite industry chain policy

Risk warning: The development of the satellite industry falls short of expectations, and the share of main equipment falls short of expectations.