Key investment points

Domestic low-orbit satellite constellations have entered a new stage of batch networking

The giant low-orbit satellite constellation is an important part of the future integrated sky, earth and sea network. In recent years, with the rapid development of Starlink in the United States, it has become the focus of countries around the world.

State Grid constellation: The State Grid constellation is a low-orbit constellation launched by China Star Network, with a total plan of 0.013 million constellations. On December 16, Starnet completed the first batch launch of Ten Stars with One Arrow at the Wenchang Satellite Launch Center in Hainan. It plans to launch about 10% of the satellites within the next 5 years and complete all launch missions by 2035.

Qianfan constellation: The Qianfan constellation plans a network of over 0.015 million stars. It has now entered the normalized and intensive networking stage. A total of 54 satellites have been launched, and the goal is to launch a total of 108 satellites this year. The application side opened up the Brazilian market. In August of this year, Brazil began negotiations with China to introduce Chinese satellite internet services.

The company participated deeply in the construction of the domestic low rail constellation and increased product support in the first three quarters of 2024. The company's revenue was 0.182 billion yuan, +7.01% year over year, net profit to mother was 14.4628 million yuan, -63.79% year over year, and net profit without return to mother was 4.1548 million yuan, or -88.89% year over year. By business, in the first three quarters, terminal RF front-end and microsystems and modules revenue was about 30 million yuan, +11%; power management chip revenue was about 80 million yuan, +7% year over year; and high-speed high-precision ADC/DAC revenue was about 70 million yuan, +3% year over year.

Power management chips: The company continues to improve the product matrix and expand new customers to increase coverage in the satellite industry. In response to the demand for low-cost commercial satellites, the company has developed derivative radiation-resistant solid state load switch chips to provide high level protection for commercial shelf devices; in addition, based on the company's self-developed chips, it has developed a variety of highly integrated power modular products to meet the diverse power supply and distribution needs of customers.

Microsystems and modules: The company continues to expand its technological leadership in microsystems and module products and promote SIP component products. Various products have been delivered to customers in the satellite industry chain in small quantities. It is expected that in the second half of the year or next year, satellites carrying the company's products will complete launch and begin in-orbit work.

High-speed high-precision ADC/DAC chips: Based on mature products, the company has developed a variety of new products for next-generation low-orbit commercial satellites and ground support equipment. The transceiver and high-speed high-precision ADC/DAC chips and DBF chips developed by the company can greatly reduce the power consumption, cost and volume of digital phased array systems, and are expected to be used on a large scale in domestic low-orbit commercial satellites in the future.

Profit forecasting and valuation

The company is one of the few domestic enterprises that can provide overall solutions and technical services for products such as RF transceiver chips, high-speed and high-precision ADC/DACs, power management chips, microsystems and modules in special industries. The domestic low-orbit satellite Internet has entered the stage of rapid networking and application promotion implementation, and the company is expected to achieve rapid growth. We expect the company's net profit for 2024-2026 to be 0.058 billion/ 0.162 billion/ 0.265 billion yuan, corresponding to a 25-year PE of 115X, maintaining a “buy” rating.

Risk Alerts

The development of the military broadband market falls short of expectations; the risk of increased market competition; and the development of satellite Internet falls short of expectations.