Zhenyou Technology has independent and controlled R&D capabilities in core network technology. According to the company's prospectus, the company continues to invest in 5G communication network system research and development, and forms 5G core network system products such as user data, control surface, and user surface. Furthermore, the company has continued to invest in satellite Internet research and development in recent years, and is also one of the few domestic enterprises with satellite Internet core network technology capabilities.

The core network is an important component of the satellite-terrestrial convergence communication architecture. Satellite internet is growing rapidly at home and abroad. Satellite-terrestrial integrated communication networks integrate satellite communication and terrestrial mobile communication through technical means, and have become a development trend in the industry. The satellite-terrestrial integrated communication architecture mainly includes four parts: a terminal, a wireless access network, a carrier network, and a core network.

Zhenyou Technology actively participated in the China Starnet Low Orbit Satellite Core Network project. China Star Network is a satellite internet operating company approved by the central government. It is led by state-owned assets such as China Electronic Information Industry Group and China Aerospace Science and Industry Group, and managed by the State Council's State-owned Assets Administration Commission. In 2022, the company won the bid for Starnet Group's low-orbit satellite core network prototype system project in the public network field. Currently, the company is actively participating in the formulation of relevant technical standards and core network system construction of China Star Network Group to ensure seamless access and service provision of various systems of satellites. In the future, it will continue to participate in the construction of Starnet Group's satellite Internet system.

Low-orbit satellite core networks are autonomous and controllable to enhance the competitive position of earthquakes in science and technology. Domestic satellite internet projects require autonomous and controllable technology, and companies such as Ericsson, Nokia, and ZTE are restricted, providing opportunities for Zhenyou to develop technology. In the field of domestic low-orbit satellite core networks, the company's current competitors mainly include a few companies such as Huawei and ICT Mobile. The satellite Internet core network is a typical “small but sophisticated” market. Currently, China Starnet's terrestrial core network base is in the early stages of construction. We believe that as China's Starnet satellite enters the routine launch and deployment stage in the next few years, the company's core network business is expected to usher in rapid growth.

Company profit forecast and rating: The company's products are strategically positioned on 5G, F5G and satellite Internet. Benefiting from the major development of domestic satellite Internet, the company is expected to usher in a period of rapid growth. We expect the company's revenue for 2024-2026 to be 1.016, 1.286, 1.562 billion yuan, and net profit to mother of 0.009, 0.048, and 0.083 billion yuan respectively, and corresponding PE is 303X, 58X, and 33X, respectively. The first coverage gives a “Recommended” rating.

Risk warning: Profitability is weakening; progress of satellite internet construction is uncertain.