This year, commercial aerospace, as a representative of new quality productivity, was written into the government work report for the first time. At the same time, 2024 is known as the "first year of the low-altitude economy", and all places are seizing the time and opportunity to create a benchmark area for the low-altitude economy.
As two emerging trillion-dollar industries, commercial aerospace and low-altitude economy are attracting more capital and entrepreneurs to enter the game. It is undeniable that the current hot spot in the investment field is also migrating to the "sky".
At the "18th China Investment Annual Conference Annual Summit", Hua Hua, CEO of Huakong Fund, Jiang Liang, Managing Director of Xiamen Lianhe, Shang Jingqi, Partner of Xinding Capital, Xia Min, Deputy General Manager of Dawnrays Investment, Zhang Jian, Managing Partner of New Micro Capital, Zhao Zengcheng, Partner of Shengyu Investment, and Zu Weiyi, Chairman and General Manager of Fengxi Fund, gave a speech on "From Commercial Aerospace to Low-altitude Economy, the Next Investment Theme is in the Sky". This topic was discussed in depth and was chaired by Hong Lei, managing partner of Tianchuang Capital.
The commercial space industry has come a long way in the past year. Internationally, SpaceX has successfully made a profit - in the first quarter of 2023, SpaceX's operating income has reached a peak since its establishment, reaching $1.5 billion and achieving a net profit of $55 million; Domestically, the "Constellation" and "Thousand Sails" programs have been steadily promoted, and a total of 67 rocket launches have been completed in China throughout the year, second only to the United States, accounting for 30% of the global rocket launches.
The development of commercial space must be a race against time, because in front of us is the market demand that is about to blow out, companies must quickly develop and launch products, launch more Chinese satellites into space, and compete for scarce space resources that are constantly being seized by international competitors.
So for investors, is the commercial aerospace field currently a track worth selling? Where are the investment opportunities concentrated in the industrial chain?
Zu Weiyi said that the track of commercial aerospace is like a computer running Moore's law, and commercial aerospace, as the auxiliary and supporting of the entire national team, may still have a large number of opportunities in the development process or the choice of new application scenarios.
Zhao Zengcheng also mentioned that commercial aerospace is an industry in the sea of stars, and the future supply creates demand, on the one hand, the cost is continuously reduced to promote commercialization; On the other hand, there will be many new applications after the networking in the future, and we feel that there is a very large space for the construction of the space-air-ground integrated information network, and we are willing to continue to explore.
But Hong Lei also said that we will not invest in projects that we do not understand and have not participated in the wrong time, nor have we participated in very popular projects, on the contrary, we have participated in some projects that we think the country needs.
In addition, for the current market structure, Jiang Liang pointed out that the existing suppliers may not be able to laugh to the last of the enterprises, so it is not advisable to use the logic of the gambling track to layout, and it is not advisable to vote for the existing satellite manufacturing suppliers, because the main engine factory will call all the existing players over to test everyone's products, the products are OK to stay, the products are not good, and new players are added. Therefore, the companies that can win in the future may not be the players that already exist, which we pay great attention to when investing.
However, compared with commercial aerospace, the concept of low-altitude economy is more ambitious, including infrastructure and airspace management equipment, aircraft design and manufacturing, and application market. So from the current situation, what is the development status of the various subdivisions of the low-altitude economy?
In this regard, Hua Hua believes that aerospace and low-altitude economy in our view these two tracks are completely different logic, commercial aerospace is basically dominated by national behavior, in the process of transition to commercialization, at present we are still exploring in this process, low-altitude economy is the main field of private derivation, although from the control point of view, the control of aviation is still very strict, although a series of recent national policies have been strongly supported, actively promoted, but in the future we really hope to open the low-altitude to the traffic management department, and ground transportation to form a synergy, so that the industry can really be promoted.
In Xia Min's view, the low-altitude economy is still a relatively early stage of development, the distribution of output value in the industrial chain is still relatively top-heavy, a bit unbalanced, nearly ninety percent of the output value of the industrial chain is concentrated in the design and manufacture of aircraft, and some other supporting operation and maintenance corresponding industries are relatively lagging behind, we feel that the next investment worth paying attention to is mainly in the infrastructure and air low-altitude airspace management system, because of its importance to determine, it will become the bottleneck of our low-altitude economic further development, It is also an important means to further break through the market application.
In addition, from the perspective of industry development factors, whether it is commercial aerospace or low-altitude economy, there are obvious "three highs and one long" characteristics, high investment, high risk, high return, long cycle, investment institutions need to break the traditional "5 + 2" and "4 + 3" cycle, in order to better become the real need for the development of commercial aerospace technology "escort"?
Shang Jingqi thinks that it is a very contradictory topic to want to invest for a short time and high returns, which is difficult to do, and only a few companies can do it.
Zhang Jian also shared: "For us, we have a scientific research foundation and an industrial base, and when we make early investment, we hope to be carefully selected before investment and intensively cultivated after investment, so we are more careful in post-investment management, and more emphasis is placed on the strength and synergy of the system. In fact, the market is very unfriendly. ”
The following is a transcript of the on-site discussion, which may provide more reference:
Hong Lei (Moderator): Today's forum is about commercial aviation and low-altitude economy, and the first part of the forum is to briefly introduce yourself, starting with the Chinese general manager.
Hua Hua: I am from China Holding Fund. Founded in 2007 from Tsinghua University, Huakong Fund is now a fully market-oriented investment institution, currently fully focused on investment in the field of science and technology. At present, the assets under management are about more than 10 billion yuan, and the investment cycle is mainly in the growth stage, including some relatively early investments.
Jiang Liang: Hello everyone, I am Jiang Liang from Xiamen Lianhe Capital, which is a CVC fund focusing on semiconductors and hard technology, and has invested in dozens of projects since its establishment in 2017, many of which are listed on the A-share market, and more than half of them are under listing review. Adhering to the concept of scientific and technological innovation, we actively empower the invested companies in the industry.
Shang Jingqi: Hello everyone, I am Shang Jingqi from Beijing Xinding Capital, which was established in 2015 and has invested in about 90 companies so far, with a management scale of more than 9 billion, of which nearly 20 companies are listed. We mainly invest in new quality productivity, including core technology manufacturing, commercial aerospace, chip semiconductors, artificial intelligence, biomedicine, and new energy.
Xia Min: Hello friends, I am Xia Min from Shanghai Dongrui Investment, we are mainly a private equity investment fund funded by several state-owned industrial groups in Shanghai, and our investment direction is relatively close to you, in line with the main industrial development direction of Shanghai, mainly in the fields of biomedicine, aerospace and military industry, new materials, new energy, and other hard science and technology.
Zhang Jian: Our new micro was established in 2011, early investment, so far almost a portfolio of nearly 100 companies, has been listed 16, because we invest in the early stage, so stand guard more, now the main investment direction is the upstream and downstream of the electronic information industry chain, upstream semiconductors, downstream communication and artificial intelligence, satellite communication is the focus of our attention.
Zhao Zengcheng: Hello everyone, I am Zhao Zengcheng from Shengyu Investment, our institution has been established for a long time, since 2002 to do investment, is a purely private industrialization investment institution, aerospace is our deep ploughing for more than 10 years of key track, the past ten years around the aviation field from aviation materials, parts, equipment to the whole machine, we have invested in a number of enterprises, the last two or three years we have also to commercial aviation and commercial aerospace to expand, but also invested in some enterprises, including satellite satellites, satellite payloads, etc., I am very happy to have the opportunity to communicate with you.
Zu Weiyi: Hello everyone, I am Zu Weiyi from Fengxi Fund, we mainly focus on the full integration of the transformation and development direction of urban investment, and create value for enterprises through comprehensive upstream and downstream integration and integration. Our main investment direction is mainly new energy and equipment manufacturing, including military-civilian integration and new energy vehicles, and the scale under management is now about 40 billion.
Where is the next opportunity for commercial spaceflight?
Hong Lei (Moderator): The composition of the guests in this session is very distinctive, first of all, everyone is invested in hard technology, and secondly, everyone's institutional background is diversified, including Tsinghua background, Chinese Academy of Sciences background, CVC background, local state-owned assets background, and pure commercial investment institutions. I would also like to introduce myself, I am Hong Lei from Tianchuang Capital, which has been deeply involved in the field of venture capital for 20 years, and has also been born in hard technology. We have invested in the first share of hydrogen energy "Yihuatong" with Huakong, and invested in Jianke Machinery together with Xinwei, and the development process of these projects also represents China's investment hotspots in recent years, from manufacturing in China to intelligent manufacturing later, and then to today's large models and artificial intelligence.
Let's go to the first topic, commercial aerospace has been hot for more than ten years, this track has produced a lot of head enterprises, various fund institutions have also participated in some investments, commercial aerospace is constantly evolving according to its own industrial logic, for example, in 2023, SpaceX's revenue has reached 8 billion US dollars, China also has data disclosure, the number of satellites launched by China is 67, reaching one-third of the United States, combined with such development characteristics, the current situation, where are the opportunities and investment points behind commercial aerospace?
Zu Weiyi: The track of commercial aerospace is like a computer running Moore's law, in China's economic model, in the process of transforming from a planned economy to a market-oriented economy, a large number of eye-catching enterprises will burst out. In my opinion, as an auxiliary and supporting support for the entire national team, a large number of opportunities for commercial aerospace in the development process may still lie in the choice of new application scenarios.
Xi'an itself is very strong in military electronic informatization, and all aspects of the commercial aerospace field are now being paid attention to are the core supporting facilities made by the original teams from some institutes and national teams. So for us, we still look at this matter from the logic of investment and exit, as an emerging industry, commercial aerospace must still be in the upstream layout at the beginning, for cost reduction and efficiency increase, materials and core components are areas of special concern to us, especially in parts, including measurement and operation control, I think this is a very important core opportunity.
Zhao Zengcheng: Commercial aerospace has been popular for more than ten years, but we really invested in commercial aerospace in the last two or three years, and we did not invest in the wave when commercial aerospace just became hot in 2015, and we also missed some good companies in today's review. But from the perspective of investment logic, we think it is not wrong, before the satellite Internet is determined, we believe that there is no commercial closed loop in commercial aerospace, so we did not lay out this track during that time.
The increasing expectation of the commercialization of the satellite Internet has brought investment opportunities to the development, launch, operation and upstream industries of the whole satellite, so we have made an investment layout in the whole satellite, payload, components and corresponding materials in the satellite platform.
Commercial aerospace is the industry of the sea of stars, and I believe that with the realization of satellite Internet applications, supply and demand will be created in the future. On the one hand, it is to continuously reduce costs and promote commercialization; On the other hand, there will be more new applications after networking in the future. In the construction of the air-space-ground integrated information network, we feel that there is a very large space, and we are willing to continue to explore.
Zhang Jian: I just mentioned what opportunities there are in this track, this question is actually very big, before answering this question, I would like to pave a little bit of the background of Xinwei. Xinwei has the background of scientific research institutes, and there is such a reason for the origin, we have laid out the satellite communication industry chain very early.
At present, they are all low-orbit broadband satellites, in fact, high-orbit already has high-throughput satellites that can be used, you have taken the plane of China Eastern Airlines or the plane of China Southern Airlines, you have the opportunity to spend money to buy traffic, use WIFI on the plane, he passes through the traffic of satellite Internet, he is now using high-orbit satellites, so the business model is now being introduced, and we have a satellite Internet operation enterprise, which will still lose more than 50 million in 2022, and it has been profitable last year, Therefore, we feel that in the context of the future integration of air, space, ground and sea, there are many application scenarios and opportunities.
Another example is that when this satellite Internet application company was doing overseas business, our overseas friendly countries asked him, "Would you like to be the operator of our country, because our country's communication infrastructure is too weak." "In a sense, the future of satellite Internet is globalized and integrated, and it is now a global network that telecommunications, linkage, and mobile dream of, so let's think about it, this is what we can do in China now, and the whole world can do it and cover it seamlessly.
Xia Min: Just a few experts have very unique insights in this field, the time when our fund was established just coincided with the time when commercial aerospace began to be chased by capital and attracted everyone's attention, and in the past two or three years, it has also focused on the commercial aerospace track, including the investment weight, and we have a team that has done more in-depth research and analysis in this field.
Like the shareholders mentioned by Mr. Zhang, these scientific research institutes and experts, we have done a lot of visits and market research work, and we have also seen that in recent years, the operating companies of commercial satellites have begun to clarify the relatively large-scale networking plan, we have a more general understanding or common view, we as a world power or power, we have the ability and need to participate in the international competition of scarce resources, including low earth orbit resources, wireless spectrum resources, but under this big logic, only we have to do so. Rather than the sufficient conditions for the development of commercial aerospace, when we discuss these projects internally, we will actually pay more attention to whether it can have a commercial scenario, and now it seems that if the application scenarios of commercial aerospace are further developed, there is still room for improvement in terms of technology and cost.
First of all, in the direction of remote sensing in the main application field, we can see that in the global payload in orbit, seventy percent is communication, but our country is the opposite, our main application is remote sensing and navigation, remote sensing this part is the service of earth observation data, our main customer, the most clear demand is still in the military and government, its application is relatively single. The value may not be so large, and only by finding a particularly large user base can the market for remote sensing data services maintain full vitality.
How can we further open up new application scenarios? It may still depend on the further promotion of technology, including the cost side, which we understand as a lower-cost way to obtain more time-sensitive and high-quality high-score data. In this case, in turn, it drives innovation in application scenarios.
In the field of communication, I particularly agree with the point of view that Mr. Zhang just said, we are facing the global market, and the number of communication satellites in the continental payload is relatively small, accounting for the disadvantage, mainly because of the high population density in our country, and the number of people covered by a single base station of the ground base station is enough to support its cost performance, and the cost performance of ground communication is too high, so it seems that satellite communication can only be used as a supplementary form. However, we are facing overseas markets and global markets, and there are still 400 million people in the world who cannot access the mobile Internet, and we can also provide communication satellite infrastructure and operation services to overseas operators in the future.
We believe that the incremental market of communication satellites in the future will mainly come from several aspects, one is the demand generated by the future space-ground Internet operation services, and satellites will be used as an effective integration and supplement of terrestrial 5G and 6G communication technologies. The second is the driving effect of some terminal manufacturers, including Huawei, Apple, OPPO, etc., all of which have the function of direct satellite connection. In addition, intelligent networked vehicles have also begun to be equipped with satellite communication terminals, which can cultivate user habits and stimulate demand expansion. The third aspect is related to another topic of low-altitude economy that we are discussing today.
An important breakthrough in the development of low-altitude economy lies in the more effective "low-altitude intelligent networking", just like the highway network is now very high in the penetration rate of intelligent transportation, our low-altitude economy also needs a unified standard external management system to provide the corresponding monitoring and command functions, the entire low-altitude intelligent network networking needs ground networks, air platforms, aircraft plus ultra-low orbit communication satellites, to work together.
The whole application scenario still exists, and the relatively large space for future growth is still in the field of communication, which are some of our observations.
Hong Lei (Moderator): Mr. Xia shared the characteristics and development status of China's own aerospace industry, and Mr. Shang would add two more sentences.
Shang Jingqi: We think that commercial aerospace is very certain, and the opportunities are also very large, we invested in commercial aerospace relatively early, and we started looking at this track four years ago, and we did a lot of arguments at that time. We have invested in several leading enterprises in China's commercial aerospace segment.
We have invested in a lot of companies with the characteristics of the times in some fields, and we can say that we are the first to "eat crabs". Like in 2017, we invested in Yihuatong, the first share of hydrogen energy, in 2017 we invested in Xpeng Motors New Energy, in 2020 we invested in China's first share of CPU customs information, Haiguang is now also the leading representative enterprise of the Science and Technology Innovation Board, and the first share of Chinese artificial intelligence Cambrian, the horizon of China's automotive chips, etc., many representative, we feel that if the track certainty is relatively strong, the opportunity is relatively large, we are willing to be the first to eat crabs.
Commercial aerospace has now also been written into the government work report, during Musk's visit to China during the May Day period ago, we have to thank Musk for the development of commercial aerospace. The global new energy vehicles are also driven by Musk, when Musk made low-orbit satellites, we were very concerned, and have begun to demonstrate this matter, there are some entrepreneurs and scientists at home and abroad in some fields are very cutting-edge, worthy of our screening and reference. Musk came to China to say whether it is to pave the way for the opening of autonomous driving, we will not discuss it for the time being, and he also said something very interesting, you can think about it.
In the field of commercial aerospace, we saw it early, and there were many companies that invested in several key components, satellites, satellite chips, rockets, and operators.
Jiang Liang: I would like to add that we think that the better investment opportunities in the commercial aerospace field at this stage are still in the upstream of satellite manufacturing, such as solar cells, 3D printed structural parts applied to satellites, and materials on missiles, which are all good investment opportunities. One thing we pay attention to when investing is that the existing suppliers may not be able to laugh to the end, so it is not advisable to use the logic of the gambling track to lay out and vote for the existing satellite manufacturing suppliers, because the main engine factory will call all the existing players to test everyone's products, the products are OK to stay, the products are not good, and new players are added. Therefore, the companies that can win in the future may not be the players that already exist, which we pay great attention to when investing.
Hua Hua: We believe that commercial aerospace itself is a ceiling, a trillion-level, and a lot of potential and development opportunities. This industry does represent a strong particularity, basically an industry dominated by state behavior, not only us, developed countries like the United States, but also an industry dominated by the state, of course, Musk has made a very meaningful breakthrough in this, but in general, the background is still from the state to get a lot of resources to form its business model.
From the perspective of the domestic situation, including launch and satellite manufacturing, from the perspective of private institutions, it is still a supplement to the main tasks of the state. In terms of investment opportunities, we also agree with related companies, basically focusing on upstream materials and parts, and we have invested in 3D printing, including printed materials, rocket nozzles, including parts used on Mars, space-grade storage equipment, and a series of companies, which we all think are very valuable investments.
Generally speaking, we have noticed that the profitability of rocket launches and satellite manufacturing is now under pressure, the challenges are still very high, and the competition is very fierce. Therefore, this field is a long-term area that deserves attention and key investment, but in terms of specific investment projects and strategies, it must be very accurate in combination with the current environment and the development and commercialization process of the market.
Hong Lei (Moderator): China will definitely participate in the space infrastructure, because the commercial space project has a long cycle time, and it will take some time to establish a profit model, and it will also need the injection and empowerment of national resources to grow.
The investment logic of Tianchuang Capital's layout in this field is similar to the investment behavior of the guests here, we will not invest in projects that we don't understand and don't have the right time, and we have never participated in very popular projects, on the contrary, we have participated in some projects that we think the country needs. For example, we invested in the aerospace grand plan, at the beginning of the remote sensing software, after the listing began to form China and even the world's first 17 satellites composed of remote sensing satellite network, in addition to investing in them before the listing, we also actively participated in the formation of the satellite network.
Another scenario is that we have invested in Yunyao Aerospace, which does meteorological occultation, although it is a start-up that has grown up with VC institutions, but as of now there are more than 20 stars in the sky, and this company will establish a global network of satellite meteorological data for China for the first time in the next two or three years. At present, most of the meteorological data purchased by domestic airlines comes from abroad, if Yunyao Aerospace can establish this network, it will solve some of the bottleneck problems, so the opportunities and volume of China's commercial aerospace are very large, we only need to participate in the space infrastructure There must be full of opportunities, but we need to grasp the rhythm.
We say that commercial space has been hot for ten years, what will happen in the next ten years? I personally still have great expectations and confidence, for example, a few figures, Musk's rocket recycling technology, the rocket he launched cost about 350,000 yuan for 1 kilogram, then he himself may be more than 10,000, our country is about 150,000, there is still an order of magnitude difference, but the recyclable part of the mainland is also developing according to its own logic, I believe that with the craftsmanship spirit of the Chinese, it will soon break through, we now have seven or eight hundred satellites in orbit, according to our plan, It should reach 10,000 in the next decade or two, and there are really a lot of investment opportunities in this field.
A low-altitude economy where controversy and opportunity coexist
The second topic is low-altitude economy, in October 2023 last year, the Ministry of Industry and Information Technology and several departments and commissions jointly issued measures to accelerate the development of such an industry, and the Central Economic Conference proposed EBITDA as a strategic emerging industry for the first time. What are your areas of focus?
Hua Hua: Aerospace and low-altitude economy in our view these two tracks are completely different logic, commercial aerospace is basically dominated by national behavior, in the process of transition to commercialization, at present we are still exploring in this process, low-altitude economy is the main field of private derivation, although from the perspective of control, aviation control is still very strict, although a series of recent national policies have been strongly supported, actively promoted, but in the future we really hope to open the low-altitude to the traffic management department, and ground transportation to form a synergy, so that the industry can really be promoted.
From the perspective of investment in this industry, we have also made some layouts relatively early. First, we have invested in an aircraft manufacturing company, which has achieved very high standards from a technical point of view or from a safety point of view, and with mass production, we think the commercial value will also be highlighted. From the perspective of national policy support and local policy support, we also expect that there will be greater development in this field. Around this logic, there are many opportunities from the upstream, parts and components all the way to the main engine aircraft manufacturing, to operation.
Jiang Liang: The upstream and downstream industrial chain of the low-altitude economy is very long, and there are many areas worth investing in, taking low-altitude manufacturing as an example, which covers chips, connectors, sensors, motors, batteries, electric drives, etc., these are relatively good investment opportunities, and can give full play to the advantages of our fund.
From the perspective of application fields, agricultural drones are now quite mature applications, which is also our advantage, our country's agricultural drones have been exported to six continents, covering more than 100 countries. It is very mature in sowing, transportation, and sprinkler irrigation, and the future market is very broad, and there is a great possibility of producing an industry leader, which is also a recommended investment track.
In addition to building a transportation system, low-altitude can also play its own advantages in the field of industrial systems, especially in combination with artificial intelligence and big data technology, so as to show its strength in the industrial field.
Shang Jingqi: We have a relatively small layout of the low-altitude economy before, because we did not expect the policy to be so quick to deliberately gradually liberalize the low-altitude control, in fact, the mainland has many advantages in the development of low-altitude economy, including the advantages of unmanned aerial vehicles, industrial manufacturing and policy. We are now arguing and looking at whether there are suitable companies in this area, and whether there are any companies with particularly good future revenue and core technology.
We feel that the low-altitude economy still has great market potential, but as far as the current market is concerned, there is only short-term speculation, and we may dig deep into the companies in this field at the right price after everyone returns rationally.
Xia Min: We observe that it is still a relatively early stage of development, the distribution of output value in the industrial chain is still relatively top-heavy, a bit unbalanced, nearly ninety percent of the output value of the industrial chain is concentrated in the design and manufacture of aircraft, and some other supporting operation and maintenance related industries are relatively lagging behind, we think that the next investment direction worth paying attention to is still in the infrastructure and airspace management system, because its importance determines that it will become the bottleneck for the further development of our low-altitude economy. It is also an important means to further break through the market application.
The airspace below 300 meters at low altitude is divided into uncontrolled airspace, which theoretically only needs to provide information services in the air, and does not need control services, but if we see the development trend of aircraft model design, composite wing aircraft, because it has better take-off and landing flexibility than fixed-wing, and at the same time in terms of cruising and load, energy consumption, it is better than rotary, so it has obvious comprehensive advantages, and it is close to fixed-wing in working state. Flight safety still depends on the reliability of routes and airspace, and the future aviation domain needs to have a universal and unified standard external management system for monitoring and commanding to ensure flight safety.
In terms of application scenarios, we believe that unmanned vehicles can be implemented quickly, on the one hand, the demand is rigid, the substitution effect is direct, and on the other hand, the approval difficulty is small;
The route of trunk logistics is relatively fixed, the take-off and landing points are easy to plan, you can avoid fusion flights, avoid densely populated areas, and it is more convenient to get a special type of flight test certificate from the Civil Aviation Administration.
Second, road transport itself as an alternative object is a very huge market, our annual vehicle freight market size reached 4 trillion, LTL transportation is almost 2 trillion, a very large market, so it is easier to land in the short term. For example, the logistics from Shenzhen to Zhuhai takes three hours to drive, and the eVTOL only needs to fly 50 kilometers through the Pearl River Delta, which takes only 20 minutes. Of course, the efficiency here not only refers to fast, but also includes many factors, the shortened transit time, whether it can improve the overall operational efficiency equivalently, but also depends on the turnaround of the take-off and landing points, charging efficiency.
Zhang Jian: Xinwei's earliest focus on this track started from the military track, early medium and large UAVs, including combat-related, we will pay attention to unmanned equipment, so pay attention to this industrial chain, just now a guest mentioned, about manufacturing must be a big track, at this stage just released low-altitude related management, I very much agree with what Mr. Xia just said, airspace control is a more important area of strong demand, including now that operators have also begun to pilot, identify or mark the situation of UAVs in the airspace, We used to say that people are in trouble at home, and no matter how good it is, it is really inexplicable, and it is possible for a drone to fly at home and knock down anything.
In addition, like commercial aerospace, because there was no such technical means or equipment before, now with this equipment, there will be a lot of business formats in the future, such as logistics, things related to transportation, satellite Internet companies can now use large UAVs to provide emergency solutions, and the air as an air base station as a disaster recovery equipment, and now it is being promoted. Last year, the state issued trillions of national bonds, and a large amount of funds were used for the construction of emergency systems, so the medium and large-scale demand related to drones will come out.
There is also related to the business model, to ensure that now To B or To G, for example, geophysical exploration or exploration, now it is possible to use technical means, with the scheme of superconducting electromagnetism to detect the state of geophysics, in short, there are two applications, one is prospecting, the second is tomb exploration, there is already a business model and income, cruising in the mining area, through the UAV program, but the UAV is a vehicle, with this thing after the technical means will become diversified.
Zhao Zengcheng: The low-altitude economy is now a controversial industry, and I personally think that this is an industry with great opportunities and challenges. There are several opportunities, starting from the individual, flying or flying your own small plane, I think at least some people's dream, not only China, from the United States, Europe, Japan, South Korea are building a new urban air mobility system such as UAM, this is an industry with a lot of imagination in the future. The second is that as a point of new economic development, the national policy also has a high degree of support, but in fact, the biggest restriction of this industry also comes from the policy, which is limited to our airspace management. From today's point of view, it has not been completely liberalized, but at the end of last year, the Civil Aviation Administration issued the "National Airspace Basic Classification Method", and the "Airspace Management Regulations" have also solicited opinions, and it is the general trend to gradually open up in the future. At the same time, the technological development and construction of the air traffic control system is also a necessary condition for the gradual opening up in the future, and the upgrading of the air traffic control system driven by technology, the safety and economic improvement of the aircraft are the core of promoting the opening of the policy.
For the current enterprises in the industry, there are also immature problems, and many new companies in the industrial chain have not yet established the concept of airworthiness to do this, which may encounter very big obstacles and twists and turns for the future development of enterprises and industries.
Zu Weiyi: You may think that the low-altitude economy is now so hot, mainly because the application scenarios are too wide in China, agriculture, forestry, animal husbandry and fishery, logistics can be used, which brings a very big opportunity, we understand that this industry is a bit similar to the integration of military and civilian, but in fact it belongs to an application scenario, for us for the layout of the low-altitude economy in fact, in our extended investment, we think that the problem is still those three things: cost, distance and safety.
There are also a large number of incremental applications in the stock investment, for example, from the perspective of distance, we have done some layout in the field of energy storage, including batteries in low-temperature scenarios, including the layout of low-temperature liquid hydrogen, and we feel that it can be used in the future for low-altitude economy and some technical means for aircraft.
The second is the safety aspect, we have also laid out lightning testing, including lightning protection equipment, as EBITDA said, it increases with the complexity of avionics equipment, the charge is also increasing, from lightning and lightning protection and technology in strong electromagnetic environments, in fact, we are also in the layout.
On the whole, we still focus on safety, distance and cost, in the past in the process of stock investment, looking for a new application scenario for them, we do not specifically want to have a low-altitude economy team, it is still in the extension of our investment, which is relatively safer.
How to become a "running companion" who is really needed?
Hong Lei (host): In itself, they have their own main business, just to add the application scenarios of the low-altitude economy to their stock of resources, I think in the uncertain state of controversy, this is a better strategy, everyone's views are more unified, in the broad market prospects, we can imagine a lot of application scenarios, but also need more perfect policies, facilities. Let us look forward to a more mature industrial chain and clearer policies to meet the outbreak of the industry.
Let's talk about how to accompany the enterprise, we have our own participation and accompany the enterprise to grow together.
Hua Hua: In the market environment, the investment period is under great pressure, especially in the case of tighter listing, and the difficulty of exit is also increasing.
Our observations, first, we look at the investment stage not from the time dimension of enterprise establishment, which is divided into early, middle and late stage, but more from the maturity of technology and the maturity of commercialization. According to the maturity curve, in the two stages, we think it is easier to earn the so-called cognitive money, that is, to be able to go deeper, through understanding, market observation, and through our own analysis and research, we can see some opportunities one step earlier than others and make layouts, which is part of it.
In addition, most of the people who believe in the process of growth are the so-called money that makes the business grow. If the company's development expectations have achieved its effect, the money for growth can still be earned.
We know the characteristics of China's capital market, there is still a relatively large gap in returns between IPO and non-IPO exits, especially in terms of the maturity of our M&A market and relative to the French economy, there is still a different logic, and the gap is also relatively large.
We look at the matter of running along, one is that you have no way, everyone wants to return during the investment period, and we investors are also responsible for LP, in the middle, we see that some of the companies we invest in, the valuation has reached several times or even more than ten times in a short period of time, in this case, the advantage of recognizing this money can be reflected and the exit can be completed. As a growth period perspective, or the pace of listing, this is indeed a century of problems, a lot of pressure, we are really thinking about this issue this year, and at the same time doing a lot of exploration, increasing the ability to exit the primary market.
Jiang Liang: Whether it is commercial aerospace or low-altitude economy, they cannot rely on a single enterprise to build an industrial chain. It is necessary to build infrastructure, build communication systems, and make breakthroughs and innovations in underlying technologies, and the whole track will not rise until these things are mature. For traditional investment institutions, if they want to manage the vast majority of their portfolios in the future in the field of commercial aerospace or low-altitude economy, they must indeed appropriately adjust their cycles and extend the entire investment period to better layout these two tracks.
Another way is to set up a special fund to lay out, which has a relatively long duration and can better serve the invested enterprises.
Shang Jingqi: I think this is a very contradictory topic, and want to invest for a short time, and want to have high returns, this kind of thing is difficult to do, only a few companies can do it, you step on the tuyere, and step on the tuyere.
So our solution is to target different people's different funds, some people can put it for a long time, I am willing to get high returns, some people's short time, get different benefits, different funds and different projects to match, and everyone invests in enterprises are also scattered in the investment, not only invest in a track, an industry, pressure a company, we are all seizing every era, I think the era after 2024, the development speed of various subdivisions will be faster, and the window period for emerging things may be shorter, Some are only four or five years old, so there are risks and more opportunities.
Xia Min: I understand that some funds, including our fund, may make adjustments to the holding and exit strategies within a certain range of standards in response to this situation, but in general, they may rely more on different fund types to match the different development stages of industries and enterprises, so that guiding funds, VC, PE, including M&A funds, can play their due allocation functions, on the other hand, enterprises themselves also need to accelerate the process of commercialization, which is a two-way process.
Zhang Jian: We rely on the system, has been doing early investment, but the way to do early investment is different for each institution, for us, we have a scientific research foundation and industrial base, and when we do early investment, we hope to do pre-investment careful selection, post-investment intensive cultivation, so we are more careful in post-investment management, more emphasis on the strength of the system and synergy, when investing in the project, we will think about what is the position of the project in our industrial chain, and what enterprise we have, or have a supply chain relationshipIn this context, we make early-stage investments, but the market is very unfriendly.
Recently, my team and I often think about whether we should do this project, think about it first, whether we can invest in two rounds, and after this round, we can invest in another round, and I think the requirements for our team are now the early stage of enterprise investment early, small investment, investment in technology, most of the hard technology companies can not be profitable in the early stage, can not maintain cash flow, can only rely on financing, not necessarily like unicorns, but most can not be profitable.
Enterprises that do the transformation of achievements often encounter changes in teams and technical directions. As an investment institution, we have indeed participated in value creation along with the growth of the enterprise, and hope to help the rapid growth of the enterprise through our empowerment.
Zhao Zengcheng: I very much agree with Mr. Zhang Jian's mental journey of early investment, the first project we invested in the aviation field was a company that made aero engine materials, and it took ten years from investment to listing, and we have also experienced this cycle, the characteristics of this industry are like this, and we must be prepared when investing. The capital market environment is one thing, the environment of industrial development is another thing, the law of industrial development can not be changed by the will of capital, we can only adapt to the development of the industry through a more perfect investment strategy, invest at the right time, and exit at the right time.
Second, Mr. Zhang Jian also mentioned just now, including the empowerment of early investment, and even the management of many twists and turns, how to do investment institutions, which is also our willingness to grow together with the enterprise. We have been investing in the aerospace field for a long time, some companies have been listed or become leading companies in the industry, and we have also established an ecosystem of aerospace industry, where we can help each other, and even generate some opportunities for mergers and acquisitions at certain nodes, bringing some opportunities for enterprise development and investment exit.
In short, the aerospace industry is a track with snow after a long slope, and everyone's mentality must be adjusted first.
Zu Weiyi: The core is to use all the resources that can be used, like us, as an investment institution with a background of urban investment, as a running person, we must first solve the biggest problem of the people we are with, so the early stage is actually an integration for us, rather than a matchmaking, in this process, in the broad CVC strategy, we regard ourselves as his real partners, in the early enterprise asset allocation and overall development process, to help them promote some communication and collaboration with industry leaders. I think it's all things that institutions with government backgrounds are good at, comprehensive empowerment, multiple empowerment.
Hong Lei (Moderator): We must strengthen our confidence to be patient capital, we have had two or three downturns in the market today, in fact, the whole market is also a state of fluctuation, we need to deal with this fluctuating cycle together, and we also look forward to our capital market and M&A market becoming more and more mature, which is our expectation for the next ten years.
Thank you, ladies and gentlemen.