Incident: Recently, the company held the 5th meeting of the 7th board of directors to deliberate and approve the company's repurchase of the company's shares with its own funds, which are intended to be used to implement the company's equity incentives or employee stock ownership plans. The total amount of capital to be used for the repurchase is about 30 to 60 million yuan, and the total number of shares repurchased accounts for about 0.35%-0.7% of the total share capital.
The repurchase shows the company's confidence and is optimistic about the continued expansion of the Internet+satellite industry: We believe that the company's current repurchase not only improves the company's long-term incentive mechanism, fully mobilizes the enthusiasm of core personnel, and promotes the company's stable and sustainable development, but also reflects the company's positive attitude towards the future development of the industry and the company itself. On the industry side, we believe the company's main focus is on the two parts of Internet+satellite, of which:
On the Internet side, we believe that the industry currently has a trend of shifting from traditional media forms to AIGC, which will not only save labor costs, but also improve some daily work efficiency. The company has high-quality customers, and has already launched applications based on AIGC technology, and is expected to usher in an improvement in revenue quality in the future. On the satellite side, the current main application scenarios are mainly in specific regions. As the satellite Internet networking process continues to advance, satellite communications and downstream applications of satellite Internet are expected to continue to expand. The company's subsidiary, Haiweitong, has experience in satellite communication operations and applications, and is expected to rapidly expand in the satellite industry. Priority benefits are given during the development period.
The rapid development of satellite internet has injected new profit momentum, and the performance of overseas subsidiaries that have increased capital is expected to exceed expectations.
In terms of communications business: Haiweitong, a subsidiary of the company, brought high-and low-orbit satellite hybrid networking solutions and ship AI products to major international maritime exhibitions in Singapore, Japan and Norway, and has added nearly 10 overseas channels and partnerships since 2023, which is expected to find market opportunities for satellite applications in more scenarios; at the same time, the company is expected to achieve multi-site coverage of tower projects throughout the year, and with the implementation of acquisition projects one after another, it is expected to become the company's profit growth point;
Internet advertising business side: Giant Network Technology, a subsidiary of the company, uses AIGC technology to deeply integrate with existing live streaming teams to help the company reduce costs and increase efficiency. The company launched a virtual live broadcast room to improve the practical application of digital human live streaming technology in live streaming business scenarios, save more than 50% of actor costs, and provide in-depth service to core customers such as Ali, Baidu, and Microwave. After 13 years of hard work, revenue quality is expected to go one step further with AI.
As the company uses the country's “Belt and Road” policy to increase capital and wholly-owned subsidiaries continue to explore overseas markets, we believe that the company's overseas customization demand is expected to increase, driving an increase in overseas gross margin, thus leading to an increase in the quality of the company's revenue. Overall, the company actively participated in the 5G construction of domestic and foreign operators, and the development of overseas business injected new momentum into profit growth.
Investment advice: Long-term focus on the communications industry, cultivate vertical applications, and continue to increase R&D investment to enhance core competitiveness. The company's R&D expenses in the first three quarters reached 119 million yuan (+18.44% year-on-year), accounting for more than 15% of the communications sector's revenue. The company's research and development is mainly invested in next-generation 5G products. It has been tested and approved by high-end customers such as global operators, and market space is expected to open up. We are optimistic about the company's high future growth. Combined with the company's latest performance, we gave the company net profit forecasts for 2023-2025 of 160 million yuan, 194 million yuan, and 244 million yuan, corresponding EPS of 0.20 yuan, 0.24 million yuan, and 0.30 million yuan, corresponding to PE 39.10 times, 32.21 times, and 25.68 times. Considering the core advantages of technology and products, we maintain a “recommended” rating.
Risk warning: the risk of exchange rate fluctuations; the risk of raw material prices rising; the risk of fluctuations in customer demand; the risk of new product marketing falling short of expectations, etc.