An Aerospace Stock You Can Buy & Hold

UNTV News   •   December 9, 2021   •   132

HONG KONG, Dec. 9, 2021 /PRNewswire/ — Elon Musk warned SpaceX employees that the firm could face a possible bankruptcy if it doesn’t make progress on developing the engines; his financial concerns dragged down several low-orbit satellite concept stocks in Taiwan by the following day. Although Elon Musk later said that a potential bankruptcy at SpaceX would be ‘unlikely’, the incident shows that it is important to look for an aerospace stock backed by business facts while avoiding blindly following the trendy thematic bets.

The upside potential of aerospace stocks is indisputable, but investors must understand the main value of the subject matter, that is where the main value of the asset lies. The low-orbit satellite concept stocks that hit hard by Musk’s concern are not satellite manufacturers, many of them are just NetCom factories or contract manufacturers, not to mention they don’t have comprehensive capabilities of satellite manufacturing, installation and testing.

Based on Solid Business Foundation

It’s clear that there is a huge difference between betting on a trendy theme and investing in a company with future growth prospects. Hong Kong Aerospace Technology Group Limited (01725. HK) is one of the few with values that lie on the principal axis of low-orbit satellites.

Since the launch of the “Guangdong-Hong Kong-Macao Greater Bay Area Golden Bauhinia Satellite Constellation”, the Starlink project has been progressing in an orderly manner. On 7 December 2021, ”Golden Bauhinia Satellite No. 5” and ”Golden Bauhinia Satellite No. 1 (03)” were successfully launched by the Galactic Energy Ceres-1 (Y2) carrier rocket, and they had entered their predetermined orbits and are currently operating normally in orbits.

The launch of the ”Golden Bauhinia Satellite No. 5” and ”Golden Bauhinia Satellite No. 1 (03)” marks the third successful launch of the “Golden Bauhinia Constellation” in 2021; and the Group has previously launched ”Golden Bauhinia Satellite No. 1 (01)”, ”Golden Bauhinia Satellite No. 1 (02)” and ”Golden Bauhinia Satellite No. 2 ” as well. The ”Golden Bauhinia Satellite No. 5” and ”Golden Bauhinia Satellite No. 1 (03) are both optical remote sensing satellites, of which, the ”Golden Bauhinia Satellite No. 5” is equipped with an industrial-grade optical camera and micro-propulsion system for low-cost on-orbit verification, and the high-function density satellite platforms which composed of commercial-off-the-shelf (COTS).

Could benefit from “Twin Cities, Three Circles”

In addition to the Group’s pragmatic approach, the “Two Cities and Three Circles” will inevitably bring growth momentum to HKATG. The “Twin Cities” refers to Hong Kong and Shenzhen, whereas the “Three Circles” includes, from the west to the east, the Shenzhen Bay Quality Development Circle, the Hong Kong-Shenzhen Close Interaction Circle and the Mirs Bay/Yan Chau Tong Eco-recreation/tourism Circle.

The concept of “Twin Cities, Three Circles” in the Policy Address 2021 will promote infrastructure development, innovation and technology industries, and improve people’s livelihood as well as the ecological environment of the Greater Bay Area. The strategic position of “Two Cities and Three Circles” is on par with Hengqin, Qianhai and Nansha, it also shoulders the responsibility of developing an international innovation and technology hub; encouraging innovation and entrepreneurship in the Greater Bay Area.

Formed by an on-orbit satellite cluster with 112 satellites, the “Guangdong-Hong Kong-Macao Greater Bay Area Golden Bauhinia Satellite Constellation” Starlink project is dedicated to the needs for building a smart city, monitoring the environment, managing energy and natural resources, and undertaking marine and disaster emergency management.

China’s PMI Rebounds

In addition, the official manufacturing Purchasing Manager’s Index (PMI) in China rebounded in November; of which China’s factory activity, in particular for railways, shipbuilding and aerospace manufacturing, drove the industrial production index to over 56.0%, which means that the activities of the commercial aerospace industry are expected to further accelerate. Since infrastructure investment is always used as an inflation hedge, concerns over higher inflation favour aerospace infrastructure, it is no wonder that the Bank of Communications (03328. HK), HKATG’s major shareholder has continuously increased its holdings on the market in the past 10 days. HKATG which plays the leading role in Hong Kong-based satellite supply chain is expected to get to the next level in 2022.


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