The aerospace industry is known as the crown of industrial civilization. Among them, the commercial aerospace industry chain covers upstream rocket launches, satellite and ground equipment development, midstream satellite operation, and downstream application scenarios including communications, navigation, remote sensing, satellite internet, space travel, and space mining.

Recently, another aerospace company impacted IPOs.

Gelonghui learned that the Beijing Stock Exchange Listing Committee is scheduled to hold its 22nd review meeting in 2024 on November 8, 2024 to review the initial issue of Zhongke Xingtu Measurement and Control Technology Co., Ltd. (hereinafter referred to as “Star Map Measurement and Control”). The sponsor is CITIC Construction Investment Securities Co., Ltd.

Starmap Measurement and Control was established in 2016. It was listed and publicly transferred in the equity transfer system in February 2023, and moved to the innovation level in June 2023. The company is a national-level specialized, sophisticated and new “little giant” enterprise specializing in space monitoring and control management and digital simulation of space vehicles in orbit. The registered place of registration is located in Hefei, Anhui.

As of the date the prospectus was signed, the shares held by Zhongke Xingtu accounted for 46.36% of the total voting shares of the company, and was the controlling shareholder of the company. The actual controller of Zhongke Xingtu is the Kongtianyan of the Chinese Academy of Sciences. Therefore, the Kongtianyan of the Chinese Academy of Sciences is the actual controller of Starmap Measurement and Control.

With this listing application, Starmap Surveillance and Control plans to raise funds for commercial aerospace monitoring and control service center and station network construction (Phase I) projects, AI-based next-generation Insider software platform development projects, R&D center construction projects, and supplementary liquidity.

Fundraising usage, image source: prospectus

1

The company is small, with a gross margin of more than 50%

Starmap Surveying and Control specializes in space measurement and control management and space digital simulation. Relying on core technologies such as high-precision trajectory, attitude, and control calculation of spacecraft, intelligent planning and scheduling of measurement and control resources, health management throughout the life cycle of satellites, integrated design and intelligent control of measurement and control equipment, the company has developed a series of Insider products with complete intellectual property rights and domestic autonomous and controllable control.

Specifically, the main products and service forms of Star Map Measurement and Control include technology development and service, software sales, ground measurement and control system construction and system integration. From 2021 to the first half of 2024, the technology development and service business accounted for more than 70% of the revenue, which is an important source of revenue for the company.

The company's aerospace experts and engineers rely on the self-developed Insider series products and accumulated various core algorithms in the aerospace field to provide customized system development and services in the fields of space measurement and control management and aerospace digital simulation for users in special fields, civil aerospace, commercial aerospace, etc.

The revenue composition of the company's main business. Image source: Prospectus

The software sales company provides users with independently developed, domestically produced and controllable Insight software products to meet the general business needs of users in the aerospace field.

At the same time, the company also provides users with, but is not limited to, space infrastructure system design, ground station index demonstration and construction, measurement and control coverage analysis and link calculation, special equipment selection and adaptation, software and hardware deployment, system installation and debugging, and ultimately delivers integrated full-function ground station systems to customers. However, the revenue share of software sales and measurement and control ground system construction business is relatively low.

The company's main business system, image source: prospectus

The company is still in a stage of rapid growth. It is small in scale. Compared with advanced companies in the same industry, it is relatively weak, and its resilience to risks needs to be improved.

In 2021, 2022, 2023, and January-June 2024 (“reporting period”), the operating income of Starmap Measurement and Control was approximately 0.104 billion yuan, 0.141 billion yuan, 0.229 billion yuan, and 0.081 billion yuan, respectively, and net profit was about 0.035 billion yuan, 0.051 billion yuan, 0.063 billion yuan, and 0.026 billion yuan, respectively.

Key financial data and financial indicators, image source: prospectus

During the reporting period, the comprehensive gross sales margins of Star Map Measurement and Control were 55.20%, 56.92%, 52.16%, and 53.18%, respectively. There were certain fluctuations, which was close to the level of comparable companies.

Comparative analysis of gross margins of comparable companies. Image source: Prospectus

Since the current end users of star map monitoring and control are mainly concentrated in fields such as special fields, civil aerospace, commercial aerospace, etc., terminal demand is highly correlated with the size of budget expenditure in special fields and national R&D investment. Although end user demand has been growing steadily in recent years and is expected to continue to rise, if there is a major adjustment, the market demand faced by the company may be affected. At the same time, with the rapid development of the industry, the company also faces the risk of increasing competition in the market.

2

Accounts receivable are increasing year by year, and the amount is larger

The space monitoring and control management and aerospace digital simulation industry, where Star Map Surveying and Control is located, involves the upper, middle and lower reaches of the aerospace industry, covering the entire life cycle of space missions.

The space industry includes the three major fields of space technology, space applications, and space science, covering the manufacturing of transatmospheric and space-flying vehicles using rocket engines, and the equipment and ground equipment they carry, launch services, and application industries.

Aerospace industry chain, image source: prospectus

Customers of Star Map Measurement and Control include the Shanghai Institute of Aerospace Systems Engineering, the Chinese Academy of Sciences, Zhongke Starmap, Starmap Space, Qilu Aerospace Information Research Institute, and Beijing Zhongke Meteorological Technology Co., Ltd. During the reporting period, the company's sales revenue to the top five consolidated customers accounted for 62.64%, 51.40%, 37.67%, and 46.50% of revenue, respectively, accounting for a relatively large share, and there is a risk of high customer concentration.

At the same time, during the reporting period, the company's related sales accounted for 36.64%, 18.45%, 11.47%, and 8.15% of the current revenue, respectively. Although there has been a decline, if the company fails to strictly implement related transaction decisions and approval procedures in the future, there is still a risk of related transactions.

At the end of each period of the reporting period, the accounts receivable balances measured and controlled by Starmap were about 0.059 billion yuan, 0.114 billion yuan, 0.163 billion yuan, and 0.21 billion yuan respectively, showing an upward trend year by year, accounting for the current revenue ratio of 56.74%, 80.39%, 71.38%, and 258.18%, respectively. The receivables turnover ratio was 2.38, 1.38, 1.39, and 0.39, respectively. The company is at risk of a large amount of accounts receivable and a decline in turnover.

It is worth noting that during the reporting period, the net cash flow from Starmap's measured and controlled operating activities was 40.5223 million yuan, -6.0519 million yuan, 14.845 million yuan, and -33.6412 million yuan, respectively. There were negative or lower net profit for the same period.