The Zhitong Finance App learned that CICC released a research report saying that on February 29, China successfully launched the satellite Internet High Orbit Satellite 01 using the Long March 3B carrier rocket. The bank believes that satellite Internet is the core content of commercial aerospace and an important strategic emerging industry. It is expected that 2024 will be the first year of large-scale domestic satellite Internet networking. Under the leadership of satellite Internet engineering, satellite manufacturing, launch, and application are all expected to enter a new stage of development, and related enterprises in the industry chain are expected to continue to benefit from the booming development of commercial aerospace.

CICC reviews are as follows:

The first networking star was successfully launched, and 2024 is expected to be the first year of large-scale networking launches.

On February 29, 2024, China successfully launched the satellite Internet High-Orbit Satellite 01. Satellite internet is the core content of commercial aerospace and an important strategic emerging industry. The bank expects 2024 to be the first year of large-scale domestic satellite internet networking; under the leadership of satellite internet engineering, satellite manufacturing, launch, and application are all expected to enter a new stage of development, and related enterprises in the industry chain are expected to continue to benefit from the booming development of commercial aerospace.

Domestic space launches in 2024 may reach a record high, laying the foundation for large-scale constellation networking.

According to the Aerospace Science and Technology Group's “Blue Book on China's Aerospace Science and Technology Activities (2023)”, China Aerospace is expected to carry out about 100 launch missions in 2024, and the number of launches is expected to reach a new high in a single year. The bank believes that 1) the expected number of launches in 2024 will increase by about 49% compared to 67 in 2023. With the opening of commercial launch sites and the first flight of the Long March New Arrow, domestic carrying capacity is expected to continue to increase and provide a key capacity foundation for large-scale constellation networking; 2) Commercial rocket launch services are becoming increasingly mature and have become an important complement to China's carrying capacity. According to the Blue Book data, domestic commercial rockets are expected to complete 30 launch missions in 2024, an increase of about 50% over the previous year.

The construction of the space segment is expected to accelerate application implementation, and direct mobile phone connections will drive breakthroughs in the general market.

1) The construction of the space segment is the foundation of satellite Internet service capabilities. Currently, applications such as aviation satellite communication have been implemented in China. The bank expects that with the construction of satellite Internet and the improvement of space segment communication capabilities, more satellite Internet applications are expected to gradually be implemented. 2) Since 2023, terminal manufacturers such as Huawei have launched a variety of mobile phone products equipped with satellite communication functions, and direct mobile phone connections are rapidly becoming popular among high-end models. NSR estimates that the cumulative market size of the mobile phone direct connection will reach 66.8 billion US dollars in the next ten years. The bank believes that direct mobile phone connection is an important application form of the satellite Internet general market and is expected to open up more room for development of the satellite Internet industry.

Valuation and recommendations:

Commercial aerospace, represented by satellite Internet, is representative of domestic new quality productivity, and enterprises in the industrial chain are expected to continue to benefit from the construction of satellite Internet projects. Recommendations: 1) Targets benefiting from next-generation satellite Internet technology: Zhenlei Technology (688270.SH), Chengchang Technology (001270.SZ); 2) Core targets in satellite manufacturing: Aerospace Electronics (600879.SH), Fudan Microelectronics (688385.SH); 3) Proposed forward-looking layout of application terminal fields: Mengsheng Electronics (). 688311.SH Recommended attention: Aerospace Huanyu (688523.SH), Zhimingda (688636.SH), Shanghai Hanxun (300762.SZ), etc.

Risk warning: App expansion falls short of expectations; constellation construction falls short of expectations.