Huajin Securities released a research report stating that the rapid development of satellite communication technology has given birth to the arrival of the satellite Internet industry. The current satellite Internet has become a key strategic area for the construction of national information infrastructure and the competition of major countries in the information age. The digital security and network security issues are gradually becoming prominent. With the cross-domain integration of satellite security and network security, the development opportunities of the satellite Internet security industry are coming, and we are optimistic about companies with state-owned background, product capabilities and benchmark customer advantages.

focus on the target: jiayuan technology (301117.SZ), electric network security (002268.SZ); Relevant targets: Qiming Xingchen (002439.SZ), Anheng Information (688023.SH), Qi Anxin (688561.SH), Shengbang Safety (688651.SH), Green Alliance Technology (300369.SZ), Jida Zhengyuan (0030S29.Z).

Huajin Securities views are as follows:

From the perspective of the security domain, the main security threats facing the satellite Internet involve communication link security, ground system security, satellite and payload security, supply chain security, and user terminal security.

Among them, the three security domains of communication link, ground system and supply chain are the most important attack targets faced by satellite Internet. The attack means mainly include interference, link hijacking, vulnerability exploitation, eavesdropping, malicious programs, etc., among which interference, link hijacking and vulnerability exploitation are the most common attack means.

From the perspective of security products, satellite Internet security products mainly include communication encryption authentication, intrusion detection and prevention, network attack resilience testing, supply chain risk management and logging systems.

among them: 1) communication link security: involving the security of uplink, downlink and inter-satellite links, mainly encryption and authentication products; 2) ground system security: there are many kinds of products, including firewalls and security gateways, as well as on-board intrusion detection and prevention systems and on-board log systems suitable for satellite internet; 3) supply chain security: it mainly covers the security of satellite system development, follow-up testing and verification, and the security management of suppliers and third-party organizations, including space range, multi-factor authentication, etc.

Key players in satellite Internet security include professional satellite security vendors, as well as defense contractors and military units.

Among them, professional satellite security manufacturers mainly focus on encryption products, while defense contractors and military units have a wider product coverage, and can integrate security functions into satellite communication equipment and deliver them to customers in the form of solutions. Domestic Internet security manufacturers can be divided into two categories based on their corporate backgrounds: 1) The national teams represented by the Internet Security of Electric Science and the South of Space. Among them, the Internet Security of Electric Science is backed by the China Electric Science and the South of Space is backed by the Fifth Academy of Space. The national team has certain advantages in obtaining general contracting projects. For example, the Internet Security of Electric Science and Technology provides password security products for Star Network as a general contracting unit, and the contract amount exceeds 20 million yuan; 2) Private satellite security manufacturers, represented by Jiayuan Technology, have their own advantages in product technology and benchmark customers, and are also important participants in the satellite security market.

The competitiveness of domestic satellite Internet security manufacturers is mainly reflected in product capabilities and benchmarking customers.

1) Satellite safety products need to have high reliability in encryption, authentication and detection in the space environment: due to the characteristics of high radiation, extremely low temperature or extremely high temperature in the space environment, compared with the ground environment, it is easy to cause a series of problems such as single particle flip of semiconductor devices, which in turn leads to the failure of safety equipment. Therefore, satellite safety manufacturers need to have satellite anti-radiation software and hardware platform development, intersatellite link encryption and other related technologies, and can meet a series of hard requirements deployed on satellites; 2) Benchmarking customers and benchmarking projects are the basis for rapid market expansion in the future. Among them, products from Electric Network Security and Aerospace Jiangnan have entered the supply chains of large satellite operators such as China Star Network and China Weitong, and Jiayuan Technology has also become a supplier of major military factories in the field of communication data transmission network security, and has established certain first-mover advantages in benchmarking customers.

market size estimation: China's satellite internet security market will increase by 7 billion yuan from 2024 to 2027.

1) according to jiayuan technology prospectus, it is estimated that during the "14th five-year plan" period, the total demand for satellite security is about 69-13.8 billion yuan, I .e. the current average annual satellite security market size is about 14-2.8 billion yuan; 2) According to incomplete statistics, according to the declaration plans submitted by various companies to the ITU (ITU), the number of small satellites in China is estimated to reach about 14000 by 2027; 3) Combined with NSR's forecast of single satellite network security expenditure and satellite manufacturing costs, it is conservatively assumed that the average security expenditure of a single satellite is 500000 yuan, I .e. 24-27 years are expected to add 7 billion satellite Internet security-related needs.

Risk Warning: Satellite construction progress is less than expected, satellite launch progress is less than expected, satellite Internet security demand growth is less than expected, market competition intensifies, and relevant policies are less than expected.