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China tech

Chinese satellite operator shoots for June IPO

Move comes as Beijing urges state-owned enterprises to go public

HONG KONG -- The company behind China's space missions will float its civilian satellite operator in June as part of the government's push for state-owned enterprises to tap private capital.

The listing comes as the global space industry is poised for rapid growth, forecast to almost double from roughly $380 billion this year to $720 billion by 2030, according to the Space Foundation, which tracks the global industry.

Beijing-based China Satellite Communications Corp. plans to raise 1 billion yuan ($149 million) through an initial public offering on the Shanghai Stock Exchange, according to a source with direct knowledge of the matter. The company is a subsidiary of military-linked China Aerospace Science and Technology Corp., which has designed and manufactured most of China's satellites.

The satellite operator -- commonly known as China Satcom -- currently has a Hong Kong-listed unit, Hong Kong APT Satellite. The planned listing will bring the rest of its operations to the stock market. China Securities Co. will sponsor the listing.

China Satcom was originally aiming for an IPO of 1.28 billion yuan, according to the preliminary prospectus it filed last year with the China Securities Regulatory Commission.

While the IPO size is modest in the context of the satellite industry, fundraising is not the main purpose, said the source, who was briefed at a recent IPO meeting and asked not to be identified because the details were private.

"China Satcom is not short of cash. It filed the application only because it has to," the person said, citing Beijing's desire to reform state-owned enterprises as the major reason.

In recent years, Chinese leaders have ramped up efforts to rejuvenate state behemoths with private capital in a bid to make those companies bigger, stronger and richer without piling up bank debt. Under that guidance, China Railway Group said in February that it will hold an IPO for its subsidiary that operates the high-speed rail line between Beijing and Shanghai. Meanwhile, China Eastern Airlines has pledged to list its logistics unit.

When asked whether its proposed listing is the result of government pressure, China Satcom simply said in an email statement that the company plans to use the funding to launch its second high-throughput satellite, which is scheduled to go into orbit later this year. High-throughput satellites represent a new generation of satellite technology that can transfer data faster and at lower costs. China Satcom launched its first high-throughput satellite in 2017.

The listing comes as countries around the world race to take advantage of the growing commercial opportunities in space, arising from falling launch costs and cheaper, smaller satellites. 

China's space sector is on the rise, fueled by both political will and market potential. Shanghai-based startup LinkSure Network, for example, aims to build a constellation of 272 small satellites by 2026 to provide satellite-based internet service worldwide, with the first one set for launch this year.

New York-listed Alibaba Group Holding, meanwhile, launched a mini-space station in 2018 for its annual Singles Day sales gala. As the platform orbited the earth, it sent out promotion messages and digital gift money to global shoppers, helping the Chinese e-commerce giant clock up 213.5 billion yuan in sales within 24 hours. Alibaba did not disclose how the space station would be used beyond sales promotion.

China Satcom said it will tap into ship and aviation communications, e-learning and other business opportunities through the use of high-throughput satellites, according to its preliminary prospectus.

The company currently has 16 satellites in service and reported revenue of 2.6 billion yuan in 2017, roughly 40% of which came from overseas markets. It also logged a net profit of 388.5 million yuan during the same period.

Wen Yunsong, son of former Chinese Prime Minister Wen Jiabao, served as China Satcom's chairman between 2012 and 2015 and then stayed on as a director until 2017. 

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