Hong Kong Aerospace Technology (HK: 01725) shares are up another 3.45% today in what seems to be a continuation of the recent trend to upgrade the stock. There's still no specific news behind the rise over the past month. As we suggested before about HK Aero Tech there simply is no particular piece of news to hang the share price movements upon. We must assume - assume, for we and no one else knows - that the rise is as a result of a change in beliefs about the company and its prospects.
Of course, the space business is quite the coming thing these days. Costs to orbit have fallen dramatically so therefore there are many things that can be done now which couldn't before. Or perhaps we should say that things that were uneconomic to do are now economic. That Starlink low orbit global internet service from SpaceX was technically feasible decades back. It just wasn't economic given the cost of getting that many satellites up there. Now it is economic as the cost of launching each bird is lower.
So it is with some of what HK Areo Tech does. They're monitoring that whole Guangdong, Hong Kong, Macau area from low orbit and that's a significant boon to anyone trying to manage or monitor that area. Which is, of course, one of the great concentrations of humans and also the economy on the planet. So there is that ongoing business and we can imagine people finding more uses for that technology which is now available to them.
Hong Kong Aero Tech share price from HK stock exchange
The other issue at HKAT is this idea of the launch pad in Djibouti. This is one of those things that could - in fact would - be entirely value transformative if it fully comes to pass. The issue is partly one of population density. Even today rockets don't always go right so launching from an area without too many people in it is still sensible. We might launch from Florida, California or Texas out over the sea but we'd not do it over New York.
But there's another issue, of orbital mechanics. Djibouti is only 800 miles north of the equator. That means that any launches from there gain substantially from the rotation of the Earth. It's not useful for polar orbits, obviously, but for most launches this extra from the spin is most useful. It's another one of those things which reduces the cost of getting into orbit.
HK Aero also has a new agreement with RBC for ground station communications. That's the big play here, that they're able to build out as full launch and tracking system of their own. Not be reliant upon other contractors.
