Hong Kong Aerospace Technology Group, Ltd. (“HKATG”) (SEHK:1725) made an announcement after trading hours on October 27th, 2021, concerning the total procurement of equipment and installing service agreement entered with China Great Wall Industry Corporation (CGWIC). According to the announcement, CGWI will provide support services in the areas of technology, equipment, intellectual property rights, and human resources for the establishment of the Group’s Hong Kong satellite manufacturing center and testing center.

CGWIC is a commercial organization authorized by the Chinese government to provide commercial launch services, satellites and carry out international space technology cooperation while providing professional personnel training and other aerospace system integration services as well as actively carrying out international operations and professional services for aerospace technology application products.

Founded in July 2019, HKATG is the first commercial aerospace enterprise in Hong Kong with a focus on satellite remote sensing, satellite manufacturing, satellite navigation, satellite communications in the aerospace industry chain. HKATG is by far the very first listed company that is providing the satellite business.

The trend of integration has emerged in the satellite industry. With such integration together with its unique model-based systems engineering, it will reshape the current process of spacecraft production. Therefore, the chain integration strategies have great significance to a fast-evolving industry.

By entering the total procurement of equipment and installing service agreement, HKATG will be given the fundamental competency for manufacturing satellites, pushing the satellite scientific research even further and boosting economic benefits. HKATG will have the capability in the manufacture of satellites, creating satellite assembly, to launch and carry out full examination and control, giving the company significant advantages in the cost and efficiency of satellite manufacturing.

Satellites can be deemed as consumer?staples, with an estimated consumption of over 40,000 low-earth orbit satellites being used annually in various fields, whereas the operation life of a satellite is around 3 years, suggesting there are 1/3 of defunct satellites needed to be replaced every year, making satellites are always in demand, almost year-round.

Having such stability of market demand, and the space industry continues its growth, there is more room for space tech firms to seize market share. It’s worth noting, price, service, and cost are the big 3 factors that contribute to a business’s success.

What makes Hong Kong a tax haven is that local corporations can save up to 30% on tax expenses per year compared to other developed countries. What’s more Hong Kong is a free port and does not levy any customs tariff on imports or exports, there is no value-added tax and sales tax. From the perspective of taxation, local corporations are offered a variety of friendly profit tax treatments.

“Zero tariffs” is Hong Kong’s advantage that cannot be overlooked. Likewise, follows a free trade policy without maintaining barriers to trade, not to mention its efficient customs clearance; Hong Kong has simply given HKATG a variety of competitive advantages.

As the low-earth orbit satellite constellations based on Starlink have boosted investor sentiment across the broader space economy, the growth in commercial aerospace is expected. In addition to the low-earth-orbit communications satellite systems, there is also low-earth orbit enhanced global navigation satellite systems, low-earth orbit IoT constellations within the clan, they are derived from the low-orbit technology. In theory, these satellites assist internet companies, new energy vehicle companies, smart equipment companies, and the construction of smart cities and other parties in the industrial chain.

Hong Kong has its over-dependence on the real estate and financial sectors, and this is nothing new. The GDP of the manufacturing sector in Hong Kong has dropped from 23% at its peak to 1.4% today. The satellite manufacturing of HKATG not only indicating “the return of precision manufacturing” but also makes “re-industrialization” a new economic catalyst for Hong Kong.