CITIC Securities: Aerospace and communication businesses will usher in a new stage of development, with the satellite industry chain expected to accelerate performance realization.

CITIC SEC released a research report stating that as private commercial rocket companies participate in the network construction of Qianfan and GW constellations, and with the maturity of recovery technology leading to a significant decrease in transportation costs, it is expected that the satellite industry chain will accelerate its performance realization. Commercial aerospace possesses "strong policy support + strong resonance between China and the US + strong industrial trends." Although there may be fluctuations in the launch rhythm due to the objective characteristics of commercial rockets, such as reusability, it is important to see the potential for exponential growth in the industry after breakthroughs in reusable technology, as well as the broader industrial space in space computing power, focusing on "core assets" and "inflation linkages": 1) reusable rockets: focusing on the 3D printing chain; 2) satellites: focusing on phased array antennas, inter-satellite laser communication, and solar panels; 3) terminals; 4) SpaceX chain. The main points of CITIC SEC are as follows: SpaceX surged 19% on its first day of trading, with funds raised going towards AI and other directions. According to China Securities News, SpaceX was listed on Nasdaq on June 12th with a closing price of $160.95, up 19.22% from the offering price of $135, giving it a total market value of $2.1 trillion, surpassing companies like Boeing, Saudi Aramco, and Tesla, making it the seventh largest listed company in the world. This IPO issued about 556 million common shares, raising approximately $75 billion, making it the largest IPO in history. The funds raised in this IPO will mainly be used to replace high-interest debt, with the company's capital expenditures in 2025 amounting to $20.7 billion, with the AI department accounting for 61%. A new stage of development is approaching for the aerospace and communication businesses. According to the company's prospectus, 1) SpaceX's main rockets are the Falcon 9 and Falcon Heavy, with a total of 170 launches planned for 2025; Starship is expected to begin commercial launches in the second half of 2026, with the V3 version SSO capacity at around 100 tons, significantly increasing the company's payload capacity. 2) Starlink has approximately 9,600 satellites in orbit, with 650 serving as direct-to-mobile satellites. The main satellite is the V2 Mini broadband satellite, with a total bandwidth of over 700 Tbps. The next-gen V3 broadband satellite is expected to launch in the second half of 2026. The spectrum trade with EchoStar is expected to be completed by 2027, followed by the launch of Gen2 direct-to-mobile broadband satellites. Starlink has over 10.3 million users globally, covering 164 countries, and is still experiencing rapid growth. The bank expects that with the commercialization of Starship and the continued iteration and upgrade of satellites, the company's aerospace and communication business will continue to grow rapidly. AI opens up market space, and space computing power is accelerating. In February 2026, SpaceX acquired xAI, the AI business being the company's largest growth area. According to the company's prospectus, the company anticipates a potential market space of $28.5 trillion, with the AI sector accounting for $26.5 trillion and enterprise applications for $22.7 trillion. The prospectus also reveals that the company has a total of 1 GW of computing power, with plans to collaborate with Tesla and Intel on the Terafab chip manufacturing project, aiming to produce 1 TW-grade computing power chips annually in the long term. According to Securities Times, SpaceX submitted an application to the Federal Communications Commission (FCC) on January 30th for a satellite system called the "SpaceX Orbital Data Center System", planning to build a space computing cluster consisting of up to 1 million satellites. With SpaceX's layout of space computing power picking up speed, especially as Starship V3 gradually matures, space computing power is poised to enter an era of mass launches surpassing satellite internet. Looking ahead to China's aerospace: network acceleration, imminent recovery. High hardware equipment costs in China make rocket reusability an important cost reduction path. At present, private rocket companies in China have successfully completed the maiden flight of the Falcon 1 liquid rocket. In the next stage, there is hope for the development of a medium-sized reusable launch rocket comparable to the Falcon 9, which will participate in the launch services of China's star network, Qianfan constellation, and computing satellites. By then, the bottleneck of rocket capacity and launch costs will be broken. Currently, the GW constellation has launched 21 sets of low-orbit satellites, while the Qianfan constellation has launched 12 sets of satellites, with around 200 satellites in orbit from both constellations. Since April, the progress of network construction has accelerated significantly, and the downstream application market is expected to gradually open up. With private commercial rocket companies participating in the network construction of Qianfan and GW constellations and the maturity of recovery technology leading to a significant decrease in transportation costs, it is expected that the satellite industry chain will accelerate its performance realization. Risk factors: Space computing power constellation construction lower than expected, satellite launch plan execution progress lower than expected, satellite ground facilities and operational service construction falling short of expectations, commercial Addsino Co., Ltd. speed lower than expected, faster breakthroughs in foreign satellite launch technology, etc.