LEO Worth a Wager than Metaverse for Investors

From low earth orbit (LEO) satellites, electric cars to Metaverse, these investment ideas have lured billions of dollars from investors around the world. The rising of the new ideas and Metaverse craze also hit China, and the popularity was exhibited in Beijing Stock Exchange kicks off trading, where several technology hardware companies only have the skin of the Metaverse surged and reached the limit up within hours.

To capture the hot money in the market, founders and executives have all tried to stake their claim in low earth orbit satellite development by launching partnership projects. Meanwhile, many firms are eager to brand themselves as Metaverse-related companies to attract investors, regardless they have little to do with this concept. The rising Metaverse hype and the blind speculation could create a material risk to investors who jump in with very little knowledge of the markets.

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The Future? Or Just Another Gimmick?

It is generally believed that Metaverse refers to a virtual space that runs in parallel with the physical world, a digital reality that combines aspects of augmented reality (AR), virtual reality (VR), social media, and others to allow users to interact, collaborate and create. In short, the concept of Metaverse is vague and certainly nascent, and related hardware and software technologies, application scenarios and business models are far from mature, it may take another 10 to 20 years to build.

Metaverse is still very much conceptual without a concrete definition, as an investment is not a virtual game, pouring your saving into an exciting and illusionary concept involves risk, a risk that is much higher than investing in a high-growth company with a pragmatic approach to business, such as an aerospace enterprise.

The tangible expansion in productivity

According to “Patent Development Report on 6G Communication Technology”, the satellite internet market size of Mainland China, including Hong Kong may reach 6161.194 billion yuan by 2035. To seize the business growth opportunities, Hong Kong Aerospace Technology Group Limited (01725.HK), the only Hong Kong-based aerospace enterprise with satellite manufacturing and testing capability, announced the opening of its satellite operation control & application centre, as well as the rooftop satellite station facility at the Advanced Manufacturing Centre premises in Tseung Kwan O on 18 November 2021, marking a new milestone in capacity expansion.

The Satellite Operation Control and Application Centre covers an area of 3,200 square metres, it will undertake the equipment configuration and installation work, operation management and provide application data to enhance the Group’s comprehensive solutions in satellite manufacturing, installation and testing. It is understood that the Group will recruit an additional 200-300 personnel for the operation control & application centre, to accelerate the production of low earth orbit satellites and respond to the huge market demand for over 40,000 satellites per year.

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A key driver for share price

With the opening of the Satellite Operation Control and Application Centre for satellites, HKATG now has Asia’s largest private satellite measurement and controlling centre. Compared with companies that used low earth orbit satellite partnership programmes as gimmicks, the actions of HKATG certainly speak louder than words. The Group is set to manufacture and launch self-made satellites, it is a solid ground for space tech investors. Using the additional personnel who work about 300 days a year as a basis for estimation, the production capacity of HKATG is expected to increase by two-fold or more in the future, meaning that rapid income growth is almost guaranteed. Based on the latest stock price of about HK$30, HKATG stock could triple in price.

Many investors pile into a hype bubble with a common misconception is that only speculative stocks generate favourable returns. The truth is that growth stocks do not always increase the risk profile of your investment; a stock backed by market demand and go hand-in-hand with the megatrend is considered the worthiest of financial investments. Shouldering the mission of promoting the re-industrialisation in Hong Kong, investing in HKATG, aka HK-made satellites seem wiser than pouring money into the Metaverse, at least for now.