Incident Overview
The China Mobile Research Institute recently announced that it has successfully completed tests for the planetary regeneration model and developed a space-borne core network and “star element system” with partners. The satellite core network is the core device of low-orbit satellite Internet. It undertakes the important task of forwarding data in orbit, thus enabling global Internet connectivity. According to actual measurements, the downlink rate of the space-borne core network can reach 5 Mbps, the uplink rate can reach 1 Mbps, the on-board forwarding rate is as high as 230 Mbps, and the on-board forwarding delay is less than 1 ms. This performance has laid a solid foundation for the development of satellite internet in China.
Analytical judgment:
6G is the era of satellite internet
In the 6G era, “conduction sensing” integrated chips and modules suitable for the satellite Internet of Things will face huge demand, especially to solve the communication problems of mobile platforms and sensor monitoring terminals that cannot be covered by land communication networks. In particular, the 6G industry application platform will focus on addressing the characteristics and application requirements of 6G networks such as multi-domain heterogeneous interconnection, integrated access to space and ground, mass device and user on-demand access, multiple user identities, cross-domain cross-authentication, and trusted access.
Software-defined satellites are trending
Software-defined satellites use computation as the center, software as the means, to implement communication, payload, and other functions traditionally implemented by subsystems through software-defined radios, software-defined payloads, software-defined data processing computers, software-defined networks, etc., and generally connect various sensors and actuators as a whole through software, and ultimately softwareization of most satellite functions. Currently, the design concept of satellite systems that prioritize algorithms has become a trend, and it is essential to develop intelligent algorithms such as in-orbit data processing, autonomous planning, and collaborative networking. Satellites will continue to evolve in the direction of software and intelligence, and the integration and exploration of AI+ aerospace will continue to create new possibilities.
The Software-Defined Satellite Technology Alliance announced plans to jointly build a shared constellation of 64,800 virtual satellites in 2022, which will carry millions of application software. According to Pengpai Network, the Secretary General of the Software-Defined Satellite Technology Alliance, based on an average daily order of 10,000 yuan per virtual satellite, the total order size would reach 236.52 billion yuan. Considering that there are 1.42 billion cars, 34.09 million ships, 564,000 aircraft, and 3 billion people without internet access, if these people, cars, boats, and airplanes can all become virtual satellite users and charge a service fee of 1 yuan per person per vehicle per ship per plane per day, their total revenue will reach 1.6 trillion yuan.
Backed by CLP Electronics, Putian Technology is expected to benefit deeply
China Power Grid Connect, the majority shareholder of Putian Technology, is a Chinese telecommunications subgroup. It has deep technology accumulation in the field of 5G and satellite communication research, and has developed in the fields of much-needed low-cost phased array antennas and RF baseband integrated chips for satellite communication. We believe China Telecom may be expected to become the main force in China Telecom's 6G industry, establishing China Telecom's leading position in the 6G communications field.
As China Power Grid Connect's only listing platform, Putian Technology injected Yuandong Communications, a high-quality asset under China Power Grid Connect, in 2017. According to the company's response on the interactive platform, Putian Technology is also deeply involved in PCB development and manufacturing. It has the process technology and manufacturing capabilities for high-speed multi-layer PCBs, and is also serving manufacturers of optical modules, servers, and switches.
Investment advice
6G communication networks will achieve “high-speed ubiquity, integration of heaven and earth, and computing network integration”, and satellite Internet is the general trend. As the telecommunications industry development platform for the Telecom Group, China Power Grid Communications, the largest shareholder of the company, is the “national team” of the satellite communication business. Taking into account the impact of the company's weak demand for intelligent manufacturing in 23 and the postponement or cancellation of private network communication project tenders, etc., we adjusted the company's profit forecast for 2023-2024 and increased the profit forecast for 2025. The company's operating revenue for 2023-2025 is 5.82/67.617 billion yuan, respectively (74.29/8.359 billion yuan for the previous 23 and 24 years, respectively), and net profit of 0.42/25/349 million yuan (425/660 million yuan, respectively, in the previous 23 and 24 years) RMB), EPS was 0.06/0.37/0.51 yuan respectively (the previous 23 and 24 years were 0.62/0.97 yuan respectively). Corresponding to the closing price of 15.61 yuan/share on February 26, 2024, PE was 254/43/30 times, respectively, maintaining a “buy” rating.
Risk warning
Downstream demand fell short of expectations, and R&D progress fell short of expectations. In February 2020, the company was issued a warning letter by the Guangdong Securities Regulatory Commission due to flaws in internal control and insufficient preparation for bad accounts receivable.