With the increasing application of remote sensing data sources, many important players in commercial satellites have started capitalization operations.
A few days ago, the IPO application of the commercial satellite company Chang Guang Satellite Technology Co., Ltd. (hereinafter referred to as “Chang Guang Satellite”) on the Science and Technology Innovation Board was accepted by the Shanghai Stock Exchange.
Jilian No. 1, independently constructed, operated, and managed by Chang Guang Satellite, which is mainly engaged in the satellite remote sensing business, is currently the world’s largest sub-meter commercial remote sensing satellite constellation.
In this IPO, Chang Guang Satellite plans to issue no more than 229 million shares and raise 2.683 billion yuan, which will be invested in the construction of the satellite constellation “Jilin No. 1,” the ecological open mall, and the symbiotic earth.
Satellite chengguan satellite achieved IPO on the science and technology
Under the influence of satellite depreciation costs, Chang Guang Satellite has been in a state of loss during the reporting period from 2019 to 2021. The operating income was 85 million yuan, 104 million yuan, and 312 million yuan, respectively, and the net loss attributable to the parent was 392 million yuan in the same period. 100 million yuan, 391 million yuan, and 220 million yuan.
Since Changguang Satellite still plans to continue to increase the number of satellites in the future, the “rising tide” of depreciation costs may bring greater challenges to its profitability.
In order to create a diversified income structure, Chang Guang Satellite has expanded various businesses, such as naming the “Jilin-1.” During the reporting period, “Jilin No. 1” has provided naming services for Peace Elite, Bilibili, CCTV Video, etc.
Since the main production and operation site is located in the economically underdeveloped provincial capital city of Changchun, Chang Guang Satellite has greater difficulty attracting talent. In order to retain technical backbones, Chang Guang Satellite has distributed 310 vehicles to technical personnel as of October 2022.
As a model for social capital to develop commercial aerospace business, although Chang Guang Satellite has no actual controller and controlling shareholder, state-owned capital still holds a relatively large proportion of voting rights. Before the declaration, Jilin Province Fangyuan Asset Management Co., Ltd. and Changchun Emerging Industry Equity Investment Fund controlled by the Jilin Provincial Government jointly held 11.46% of the shares of Chang Guang Satellite.
In addition, the important shareholders of Chang Guang Satellite are the natural person Sun Mingchen and his concerted person Changchun Wenyu Aerospace Technology Co., Ltd. (hereinafter referred to as “Wenyu Aerospace”), etc., with a total shareholding ratio of 22.83%.
Trade Wind (ID: TradeWind01) noticed that Sun Mingchen and the Changchun Institute of Optics, Fine Mechanics, and Physics of the Chinese Academy of Sciences (hereinafter referred to as “Changchun Changguang”), which holds an 11.16% stake in Changguang Satellite, jointly established other companies. Under the suspected potential connection, the total shareholding ratio of the two has reached 35.25%, but Sun Mingchen and Changchun Changguang have not been identified as persons acting in concert, which also brings potential challenges to the identification of the actual controller of Changguang Satellite.
Expansion of “sideline business” such as cultural creation and naming
Advances in satellite technology have brought greater imagination to commercial spaceflight.
Changguang Satellite is a commercial aerospace company that provides remote sensing information, satellite manufacturing, and related services. It is also a rare company in the industry that has both satellite manufacturing and information service capabilities. Read More:- The biggest mystery of Ankita Bhandari’s murder became a challenge to solve! Read Inside Story
The current flagship product of Chang Guang Satellite is the “Jilin No. 1” in-orbit remote sensing satellite system, independently constructed and operated, with a total of 72 satellites and a resolution of 0.5m and 0.75 meters. The constellation of meter-class commercial remote sensing satellites.
Among them, the resolution accuracy of 0.75m is already higher than Planet Lab, which currently owns the world’s largest commercial remote sensing satellite constellation, but still lower than the 0.31m resolution achieved by Digital Earth, which is a relatively high level in the industry.
However, compared with the satellite system of Digital Earth Company, which can only cover 60% of the world, Chang Guang Satellite’s “Jilin-1” has the ability to revisit any location in the world 23 to 25 times a day, covering the world twice a year, and covering the entire country. ability to cover 6 times a year.
Based on the advantages of large coverage and high resolution, the remote sensing information business has gradually become the main source of income for Changguang Satellite. From 2019 to 2021, this business will generate revenues of 20 million yuan, 91 million yuan, and 182 million yuan, respectively. The proportions are 19.02%, 87.20%, and 58.36% respectively.
Due to its completely independent property rights, Chang Guang Satellite is also more confidential and secure than companies that rent foreign satellites to provide data information services. The main customers include my country’s central enterprises and their subordinate units, government agencies and public institutions, etc. . For example, in 2021, including China Electronics Co., Ltd. and Inner Mongolia Autonomous Region Bureau of Surveying, Mapping and Geographic Information, etc. are the top five customers of Changguang Satellite, which contributed a total of 226 million yuan in revenue that year, accounting for 72.64% of the total revenue for the current period.
In addition, Chang Guang Satellite is also actively developing a “sideline business” such as commercial naming in the satellite manufacturing business, for example, by launching satellites carrying information such as the customer’s company name printed into the sky, so as to help customers achieve specific publicity. Purpose.
Since 2017, Changguang Satellite has provided naming services for Bilibili Video Star, CCTV Video, Xueersi, and other enterprises. Among them, it is particularly notable that it is named the “Peace Elite” operated by Tencent Photon Studio Group. The relevant words of the game.
Public reports show that when the Gaofen 02D under the “Jilin No. 1” takes off in 2021, the words “Peace Elite” and “Photon’s 2nd Anniversary” will be engraved on it, and the pattern of the latter is composed of the player ID of the Peace Elite. Not only that, but the base map of Peace Elite also uses the remote sensing data provided by “Jilin No. 1.”
However, the naming business currently accounts for a relatively limited proportion of Chang Guang Satellite’s revenue structure. From 2019 to the first half of 2022, this business will generate a total revenue of 14 million yuan, accounting for only 2.61% of the total revenue.
However, the expansion of peripheral businesses may have become one of the growth points for the future development of Chang Guang Satellite. Chang Guang Satellite’s IPO plans to use 213 million yuan of funds to develop the “Jilin No. 1” ecological open mall project, which covers naming, space photo-themed activities for C-end users, cultural and creative peripherals, etc.
How to get out of the loss period
Although revenue has entered a stage of steady growth, the total loss of Changguang Satellite during the reporting period still reached 1.209 billion yuan, which is mainly related to the depreciation policy.
The depreciation policy of Chang Guang Satellite is the annual average method, the depreciation period is 3–8 years, and the annual depreciation rate ranges from 12.50% to 33.33%. From 2019 to the first half of 2022, the satellite depreciation amounts of Changguang Satellite are 77 million yuan, 130 million yuan, 173 million yuan, and 96 million yuan, respectively, accounting for 49.54%, 73.11%, 50.60%, and 50.60% of the current operating costs. 71.18%. However, the depreciation amount cannot even cover the income in some years, and the proportions of the depreciation amount in the operating income during the same period were 90.59%, 127.88%, 55.45%, and 266.67%, respectively.
This has led to the gross profit margin of Chang Guang Satellite’s comprehensive business being in a negative stage from 2019 to the first half of 2022, the gross profit margins are -84.48%, -70.04%, -9.84%, and -278.32%, respectively.
It is worth noting that the meaning of the satellite depreciation period of Chang Guang Satellite is slightly different from that of wafer manufacturing equipment. Although the latter also faces a depreciation period of 5 to 7 years for equipment manufacturing, its equipment can still be used after this period. Although in the initial stage of wafer manufacturing, due to a large amount of equipment depreciation, the gross profit margin had to be negative. However, as the volume of wafers continues to increase, the revenue can gradually cover the depreciation cost and become profitable.
But what is different is that the “3 to 8 years” satellite depreciation cycle of Chang Guang Satellite is almost equal to the expected service life, which means that the depreciation amount will increase year by year as the number of satellites increases. Changguang Satellite plans to achieve 138 satellites in orbit and 10-minute revisit capabilities at any point around the world by the end of 2023 and achieve 300 satellites in orbit and global sky coverage by the end of 2025.
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The increased number of satellites may result in a larger depreciation amount in the future. If Changguang Satellite cannot obtain more substantial income in the future, it may become more difficult to turn losses into profits.
While depreciation costs erode profits, the risk of launch failure also plagues Chang Guang Satellite.
In 2020, both the Gaofen 02C and 02E satellites of Jilian-1 failed to launch, and the total number of domestic launch failures in that year was only 4. Chang Guang Satellite chose to hedge this risk through insurance and other means.
The reserve of technicians is an important guarantee of the quality of Changguang satellite products. As of the end of June 2022, Chang Guang Satellite has 448 technicians, accounting for 76.32%.
However, since the main production and operation site is located in Changchun, the capital of Jilin Province, which is economically underdeveloped, it is destined that Changguang Satellite will have to pay higher costs to attract talent. Tradewind (ID: TradeWind01) noticed that as of October 2022, Changguang Satellite has completed the distribution of 5 batches of employee transportation vehicles, with a total of 310 vehicles.
“With the continuous development of the company, the traffic vehicle incentive policy will continue to be carried out.” Chang Guang Satellite Chairman Xuan Ming pointed out.
Among them, the 58 Audi A3 cars distributed by Chang Guang Satellite to reward some technical backbones in 2015 were sponsored by shareholder Wenyu Aerospace and were given away for free. In order to solve the problem of related transactions, Chang Guang Satellite obtained a batch of cars from Wenyu Aerospace at a price of 41,000 yuan each in 2021.
But the price is obviously lower than the market price. According to public information, the sales price of the 2014 Audi A3 second-hand car is still as high as 80,000 yuan, and it belongs to the “urgent sale” price.
Although Wenyu Aerospace’s shareholding ratio in Changguang Satellite is only 10.15%, Sun Mingchen, through his controlled Wenyu Aerospace and concerted actors Changchun Zhongyuan Aerospace Information Co., Ltd., Changchun Zhuoshen Chuangjing Technology Co., Ltd., Jilin Provincial Zhongxing Huasheng Investment Service Center (Limited Partnership) and natural person Zhao Yongyang control 24.09% of the shares of Changguang Satellite.
On the one hand, its “generosity” to Chang Guang Satellite is related to the higher voting rights of the parties acting in concert, and on the other hand, there seems to be a deeper cooperation between Sun Mingchen, the actual controller, and Changchun Changguang, the shareholder of Changguang Satellite. relation.
Industrial and commercial information shows that Sun Zhibin, the father of Sun Mingchen, and Changchun Changguang jointly established Jilin Changguang Shengshi Technology Co., Ltd. (hereinafter referred to as “Chang Guang Shengshi”), and Changchun Changguang controlled or invested in Changchun Changguang Zhongtian. There are as many as 7 companies, including Optoelectronics Technology Co., Ltd., Jilin Province Changguang Ruisi Laser Technology Co., Ltd., and Changchun Changguang Boxiang UAV Co., Ltd., that share the name “Changguang” with the issuer.
The prospectus shows that Sun Mingchen and Changchun Changguang did not constitute persons acting in concert, but behind the above-mentioned equity cooperation, whether there is an undisclosed deeper connection may be particularly important—if the two and their persons acting in concert If the total shareholding ratio of the company is calculated, the total shareholding of the party will reach 35.25%, which obviously may bring challenges to the accuracy of the disclosure of the actual controller of Chang Guang Satellite. Read More:- Will the new Coronavirus end after death? Scientist: A large number of new Coronavirus are still alive in the body
Not only that, among the board seats of Changguang Satellite, Chairman Xuanming, Secretary Wang Dong, and employee representative director Zhu Ruifei have all served in Changchun. Using combined statistics, Changchun Changguang may control 5 board seats, accounting for five-sixths of the number of non-independent directors.
In this context, the accuracy of the determination of the actual controller of Chang Guang Satellite may also be a potential test for its IPO.