21st Century Business Herald reporter Sun Yan reported from Shanghai

Recently, Chengdu Guoxing Aerospace Technology Co., Ltd. (hereinafter referred to as "Guoxing Aerospace") submitted to the main board of the Hong Kong Stock Exchange. Founded in May 2018, the company focuses on the design and development of low-orbit satellites (especially AI satellites), and is the first commercial aerospace enterprise in China to develop, manufacture and launch AI application satellites and AI intelligent computing satellites.

At present, there are BDStar (002151. SZ), Aerospace Hongtu (688066. SH), Hangyu Micro (300053. SZ) and other commercial aerospace listed companies, and there are no commercial aerospace listed companies in Hong Kong stocks.

"In 2024, the total amount of commercial space financing in China will be about 5.515 billion yuan, less than half of SpaceX's largest single financing amount ($1.8 billion)." Some people in the industry pointed out that China's commercial aerospace enterprises mainly rely on social financing and have not yet formed an effective hematopoietic capacity of their own, and the commercial aerospace enterprises represented by Changguang Satellite and Aerospace Hongtu have also suffered large losses, and even some companies have been unable to obtain sufficient funds for development and have come to a standstill.

This time, Guoxing Aerospace sprinted to Hong Kong stocks as the "first commercial aerospace stock", can it bring a new story?

AI + satellites

In terms of function, traditional satellites mainly include communication satellites, navigation satellites and remote sensing satellites. AI satellites are newly developed and emerging types with the development of AI technology, which can be further divided into AI application satellites and AI intelligent computing satellites.

Guoxing Aerospace's satellites mainly include traditional remote sensing satellites, AI application satellites, and AI intelligent computing satellites. As of January 18, 2025, Guoxing Aerospace has jointly developed 6 traditional remote sensing satellites and 1 AI application satellite with partners, and independently developed 4 AI application satellites and 4 AI intelligent computing satellites.

Among them, the AI application satellite is equipped with an AI payload to provide AI-driven data analysis and calculation for its own operations, and enhance remote sensing and data processing capabilities. The AI Intelligent Computing Satellite uses space edge computing technology to provide AI-driven remote sensing data analysis and algorithmic computing to support the operation of itself and other aircraft and ground applications.

At present, Guoxing Aerospace has launched the "AI Satellite Network System" project, which is a plan to promote satellite data processing through AI and space edge computing technology. It is also promoting the "Star Computing Project" to build a space-based computing network composed of 2,800 AI intelligent computing satellites. At present, the orbits and spectrum of 2,800 AI intelligent computing satellites under the Satellite Computing Program have been approved and publicized by the International Telecommunication Union.

The satellite development work of Guoxing Aerospace is mainly deployed in Chengdu and Jiaxing: the Chengdu AIT Center will start operation in 2021, and the Jiaxing Satellite Test Base will be put into operation in 2024, both of which support the development of multi-functional satellites under 500 kg. In addition, the company plans to establish a center in Shenzhen that combines satellite R&D and manufacturing.

The funds raised will be mainly used to build a Shenzhen center for satellite research and development after approval by relevant departments, as well as to enhance R&D capabilities, selectively seek strategic investment and acquisition opportunities, etc.

Star-based solutions contribute the majority of revenue

Guoxing Aerospace adopts an integrated business model of satellite design, satellite development, satellite launch and operation control, and satellite-based solutions, and its main business consists of three parts: satellite-based solutions, satellites and related services, and other services.

In terms of satellite-based solutions, Guoxing Aerospace converts satellite remote sensing data into high-precision 3D digital models to support multiple industry applications, including satellite-based solutions such as spatial intelligence and computing services, digital city applications, urban governance, cultural tourism, sports and game applications.

This constitutes the main source of revenue for Guoxing Aerospace: in the first three quarters of 2022, 2023, and 2024, satellite-based solutions contributed 58%, 90.7%, and 81.5% of Guoxing Aerospace's total revenue, respectively.

In terms of satellites and related services, the revenue of Guoxing Aerospace covers the entire satellite life cycle, including payload, platform and satellite R&D, assembly, testing, launch coordination, in-orbit delivery, and post-launch operation and control management.

In addition to the four AI satellites already developed, as of January 18, 2025, Guoxing Aerospace has received orders for the development of another 20 AI intelligent computing satellites, and has entered into launch service agreements for 12 of them, which are expected to be launched in 2025.

In terms of gross profit margin, the gross profit margin of satellite-based solutions is relatively stable, while the gross profit margin of satellite and related services fluctuates greatly: the gross profit margin in the first three quarters of 2022, 2023, and 2024 will be 32.2%, -107.1%, and -7.3%, respectively.

Regarding the fluctuation of the gross profit margin of satellites and related services, Guoxing Aerospace explained that on the one hand, the cost of satellites and related services is relatively high, and it is necessary to use space-grade components as satellite materials and pay for a large number of launch costs of launch service providers; On the other hand, in the early stages, the company adopted a single-satellite sales model, resulting in production costs higher than the negotiated project value.

In the prospectus, Guoxing Aerospace emphasized that satellites and related services form the foundation of the company's business. However, from the perspective of revenue, Guoxing Aerospace still needs to realize the economic benefits of AI satellites and give full play to the ability of mass manufacturing to bring economies of scale.

The inflection point of profit and loss is waiting to be realized

In the first three quarters of 2022, 2023, and 2024, Guoxing Aerospace recorded revenues of 177 million yuan, 508 million yuan, and 237 million yuan respectively, with losses of 91 million yuan, 139 million yuan, and 214 million yuan respectively.

According to the prospectus, in terms of revenue in 2023, China's top 10 private commercial aerospace enterprises engaged in satellite-related business accounted for about 49.4% of the total revenue of all private commercial aerospace enterprises engaged in satellite-related business. Among them, Guoxing Aerospace ranked eighth, with a market share of 1.9%.

For the continuous loss, Guoxing Aerospace said that on the one hand, it was due to the fluctuation of gross profit margin of satellites and related services; On the other hand, the company is in the early stage of ramp-up and needs to invest heavily in R&D and launch of AI satellites, improving AI algorithms and computing power, acquiring customers and developing relationships, and attracting talent.

"While these necessary investments will impact our profitability for the time being, they will be critical for us to capitalize on future opportunities in the fast-growing satellite and related services markets." Guoxing Aerospace said it expects to significantly reduce costs and enhance pricing power as technology continues to advance and mature, transition to mass manufacturing and improve operational efficiency.

With continuous losses, Guoxing Aerospace has carried out 9 rounds of financing since its establishment. After the completion of the latest round of financing, the post-investment valuation reached 6.5375 billion yuan.

It is worth mentioning that on October 6, 2024, Guoxing Aerospace announced the completion of the technical verification of the AI large model for satellite in-orbit operation, which verified the spatial adaptability of the National Star Aerospace AI large model in orbit, the reliability of the computing satellite platform and the effective computing power of high-performance computing payloads in orbit, and completed the technical verification of the world's first AI large model for satellite in-orbit operation.

Debang Securities research pointed out that computing power on the satellite may provide a new model of commercial closed-loop for the satellite Internet, and put forward new requirements for satellite payloads and electrical systems.