CITIC Securities: Mate X6 Three-Network Satellite Collector's Edition Released, Low Earth Orbit Satellite Terminal Developed Simultaneously

According to the Zhitong Finance APP, CITIC Securities published a research report stating that on November 26, 2024, Huawei officially launched the Mate X6 Three-Network Satellite Collector's Edition at the Mate brand gala, marking the debut of the world's first smartphone supporting BeiDou messaging, Tiantong communication, and low Earth orbit satellite internet. This is the first time low Earth orbit satellite internet is supported by Huawei's series of mobile terminals, with the system currently undergoing testing and expected to enter public testing in the second half of 2025. As China is about to enter a large-scale networking phase for low Earth orbit satellites, the launch of the Mate X6 Three-Network Satellite Collector's Edition also signifies that terminal research and development and testing are entering a rapid development phase. Regarding the Qianfan Constellation, the Zhongke Xingchen company has been established, and Shanghai Hanxun (300762) is laying out low-cost, high-performance satellite terminals to promote the research and development of Qianfan Constellation user terminals. Huawei launches Mate X6 Three-Network Satellite Collector's Edition, first to support low Earth orbit satellite internet. According to Huawei's terminal WeChat video account, on November 26, 2024, Huawei officially released the world's first mass-market smartphone supporting three-network satellite communication, the Mate X6 Three-Network Satellite Collector's Edition, at the Mate brand gala. The Mate X6 Three-Network Satellite Collector's Edition supports BeiDou satellite messaging, Tiantong satellite communication, and low Earth orbit satellite internet. This is the first time low Earth orbit satellite internet is supported by Huawei's series of mobile terminals. According to Richard Yu's speech materials at the launch event, the system is currently undergoing testing and is expected to enter public testing in the second half of 2025. CITIC Securities believes that Huawei's introduction of low Earth orbit satellite internet on mobile terminals is an important step towards achieving full-scenario communication coverage for mobile terminals and a significant attempt to bring low Earth orbit satellite internet technology into the mass market. As China is about to enter a large-scale networking phase for low Earth orbit satellites, the launch of the Mate X6 Three-Network Satellite Collector's Edition signifies that terminal research and development and testing are also entering a rapid development phase. Starlink mobile direct connection targets the existing market, having launched 285 mobile direct connection satellites. According to "Mobile Direct Connection Satellites: Starlink's Communication Capability Analysis for Existing Mobile Phones" (Ding Jianrui, Zhang Bojia, Fan Haonian, et al., September 2024), Starlink's mobile direct connection service primarily targets general mobile terminals, with its mobile direct connection payload (DTC, Direct-To-Cell) mounted on the second-generation Starlink V2-mini satellites. This service compensates for the high loss and high latency issues between satellite and ground connections through enhanced satellite performance. Direct communication tests have been completed for Samsung, Apple, and Google phones. As of November 25, 2024, the total number of Starlink direct connection mobile satellites launched has exceeded 320. According to SpaceNews, SpaceX President and COO Gwynne Shotwell stated at the 31st Annual Baron Investment Conference on November 15, 2024, that SpaceX will begin providing direct connection device services in about a month (December 2024), with the initial version suitable for "very small data" and SMS services Zhongke Xingchen Company Established, Shanghai Hanxun Expands Terminal Business. According to information from Qichacha, Chengdu Zhongke Xingchen Information Technology Co., Ltd. was established on November 11, 2024, with the legal representative being Gu Xiaohua, the secretary of the board of directors of Shanghai Hanxun. From the equity structure of Zhongke Xingchen, the major shareholder is Shanghai Hanxi Technology Partnership, holding 30% of the shares, while Shanghai Hanxun's general manager Hu Shiping and secretary Gu Xiaohua each hold 25%, and Shanghai Hanxun and Chengdu Zhongke Micro each hold 10% of the shares. Zhongke Xingchen's business scope includes the sale of mobile communication equipment, the sale of satellite mobile communication terminals, and the integration of satellite technology comprehensive application systems. According to a speech by Lu Ben, Senior Vice President of Yuanxin Satellite, at the 2024 Global 6G Development Conference, user terminals are the bridge connecting users with the services provided by the Qianfan constellation. Yuanxin Satellite strives to build a low-cost, high-performance industrial chain, which places high demands on the research and development of user terminals. Yuanxin Satellite is addressing this issue by organizing the self-research of a series of key chips, including baseband chips, while also actively promoting the research and development of some low-orbit satellite terminals and broadband receiving terminals. Risk Factors: The construction of satellite internet constellations in China is below expectations, China's satellite launch plans are below expectations, the construction of ground facilities and operational services for satellites in China is not meeting expectations, the development speed of commercial aerospace in China is below expectations, and foreign satellite launch technologies have faster breakthroughs; the Mate X6 three-network satellite direct connection effect is also below expectations. Investment Strategy: Developing the aerospace industry and building a strong aerospace nation, China's aerospace industry has entered a "fast lane" of development. With the release of the Mate X6 three-network satellite collector edition representing mobile direct connection terminals, which is expected to start public testing in the second half of 2025, CITIC Securities believes that various low-cost, high-performance satellite terminals will gradually enter the research and development and testing stages, and satellite internet is accelerating towards broader application fields. It is recommended to pay attention to the following sub-sectors: 1) Satellite manufacturing; 2) Commercial rockets; 3) Ground equipment; 4) Operational services