Investment highlights Leading satellite communication operators. The company was founded in 2001 and is the only autonomous and controllable satellite communication operator in China with communication satellite resources. It was listed on the Shanghai Stock Exchange in June 2019. The controlling shareholder and actual controller of the company is Aerospace Technology, which is the core professional subsidiary of China Aerospace Science and Technology Corporation Limited engaged in the satellite operation and service industry. The company's main business is satellite space segment operation and related application services. It is mainly used in satellite communication and broadcasting. It can provide products and services including satellite communications, satellite broadcasting, emergency support, application services and customized services. The main customers include radio and television related units, telecom operators, government departments, national defense units, and large enterprises in the fields of finance, transportation, petroleum, etc. The company currently operates 16 commercial communication broadcasting satellites. Its satellite transponder resources cover the C band, Ku band, and Ka band. As the main carrier for China's satellite resources to achieve global coverage, it has developed into the second largest fixed communication satellite operator in Asia and the sixth largest in the world. High-throughput satellites drive rapid growth in the satellite service industry. The communications satellite operation industry is a satellite service industry. It is a capital-intensive industry with large capital investment and low marginal usage costs to form economies of scale. Looking at the international market, due to advances in satellite technology, the supply of satellites has increased, and market competition is fierce. As of the end of 2017, there were more than 40 major fixed communication satellite operators in the world. Judging from the domestic market, only three domestic companies are qualified to operate satellites. The company is the only satellite communication operator with satellite resources, and the domestic market share is high. 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 terms of capacity and cost per unit bandwidth, and have broader competitiveness and application prospects in broadband access, satellite relay stations, mobile communications, broadcast communications, etc. We believe that from the demand side, the satellite communication industry will be accelerated by new demand such as the launch of high-definition programs and “dynamic communication” in the future. Specifically, the development direction of the radio and television industry has become the development direction of the radio and television industry, and radio and television stations continue to increase in bandwidth demand for satellite transmission of radio and television programs; satellite communication is the only or most economical communication solution for “dynamic communication”. For shipborne communication, global marine satellite communication bandwidth is seriously insufficient. For airborne communication, the penetration rate of domestic airborne WiFi is expected to increase dramatically in the future. For vehicle-mounted communications, high-throughput satellite signals It is more stable and has wider coverage; at the same time, remote regions and the “Belt and Road” are expected to bring new growth space. High-quality satellites and customer resources lay the foundation for the company's future growth. As the main carrier of China's satellite resources to achieve global coverage, the company has developed into the second largest fixed communication satellite operator in Asia and the sixth largest in the world. In terms of satellite resources, the company operates 16 commercial communication broadcasting satellites, and its satellite transponder resources cover the C band, Ku band, Ka band, etc. The satellite communication broadcast signal covers all of China, Australia, Southeast Asia, South Asia, the Middle East, Europe, Africa and other regions. The company's transponder usage rate is higher than the industry average, and it responds flexibly to changes in the market environment; in terms of customer resources, the company has a long-term and stable relationship with major customers. According to the prospectus, the company's market share has reached 80%, which is the most important satellite segment operation in the domestic market Service providers; from the perspective of business layout, the company is actively building high-throughput satellites, cooperating with domestic Internet companies, telecom operators, airlines and other industry enterprises to expand the field of satellite application services and create a commercial application model for Ka broadband satellites with Chinese characteristics. Investment suggestion: As the only satellite communication operator with autonomous and controllable commercial communication and broadcasting satellite resources in China, the company has high-quality communication satellite resources and rich frequency orbital resources, has advanced international, autonomous and controllable satellite Internet application service capabilities, and has a high market share. In the future, along with the construction and operation of high-throughput satellites, it will bring new space for the company's performance growth. We expect the company's net profit in 2019-2021 to be 467 million yuan/531 million yuan/616 million yuan, respectively, and EPS of 0.12/0.13/0.15 respectively, covering the first time, giving it an “increased holding” rating. Risk warning: risk of changes in industrial entry policies; risk of falling prices due to intense international competition; risk of overseas operations; risk of high-throughput satellite market expansion that does not meet expectations; risk of competition between different means of communication; risk of macroeconomic cycle fluctuations; market systemic risk