A Leading Provider of Satellite Antennas
The authors are analysts of Shinhan Investment Corp. They can be reached at bh.lee@shinhan.com and wonyong.sim@shinhan.com, respectively. -- Ed.
Satellite antenna maker with no.1 market share in maritime VSAT
Intellian Technologies is a leading provider of satellite antennas, holding the largest global market share in maritime VSAT (very small aperture terminal). The company provides various types of solutions for satellite communication, including VSAT, FBB (fleet broadband), TVRO (TV receive-only), flyaway antenna (land-based transmitting-receiving antenna), and gateway antenna. As of 1H21, Intellian Technologies generates 70% of sales from VSAT, 10% from TVRO, and 6% from FBB.
LEO VSAT business to benefit from growing metaverse infrastructure
We focus on the strong growth potential of Intellian Technologies in the LEO (low earth orbit) satellite communication market. The company has successfully expanded into the LEO VSAT market by securing a supply contract from OneWeb. OneWeb is preparing to deliver LEO satellite services for all regions north of 50 degrees latitude (UK, Alaska, Northern Europe, Greenland, Iceland, etc.), with plans to launch a constellation of 648 LEO satellites by 2022 and expand service areas.
The LEO satellite communication market is in its nascent stage with OneWeb, Space Exploration Technologies (Starlink), and Amazon competing to secure early leadership and set to face more competition from many other big tech companies. Expansion of the metaverse ecosystem requires a broader communication infrastructure with no shadow areas. We expect to see people enjoying metaverse content anywhere on land, at sea or in the air in the near future. Upbeat prospects for the metaverse are boosting interest in 6G. With LEO satellite network expected to become the standard for 6G, Intellian Technologies stands to benefit as key part of the value chain.
New biz: Investments in 2021 to lead to visible earnings from 2022
Intellian Technologies is forecast to report operating loss of KRW2.2bn (negative swing YoY) on sales of KRW109.2bn (-0.8% YoY) for 2021, due mainly to increased investments into capacity additions for new businesses (LEO VSAT, etc.) and workforce expansion at the US subsidiary. Earnings from orders secured for LEO and MEO (medium earth orbit) VSAT should be booked in phases from 2022.
Intellian Technologies stands to see the inflow of more orders and further improvement in margins once OneWeb expands its service areas and launches additional satellites. We believe additional orders from OneWeb or client diversification will drive up sales and product ASP going forward.