How to invest in the second space race

{"text":[[{"start":null,"text":"

"}],[{"start":7.39,"text":"China is going to the far side. "},{"start":9.719,"text":"India went for the price of making a movie. "},{"start":12.224,"text":"The US wants to create a new time zone. "},{"start":14.767,"text":"With everyone shooting for the moon, how can investors snatch a piece of the action? "}],[{"start":19.97,"text":"There’s plenty to reach for: the global space economy will treble to $1.8tn by 2035, reckons the World Economic Forum. "},{"start":28.637,"text":"If these projections pan out, this will be a sector roughly on a par with the global semiconductor industry. "}],[{"start":35.17,"text":"Pure plays with scale are rare. "},{"start":37.562000000000005,"text":"Elon Musk’s SpaceX is unlisted. "},{"start":39.992000000000004,"text":"Virgin Galactic, UK tycoon Richard Branson’s lunar tourism play, is more accessible, having listed in New York via a Spac in 2019. "},{"start":48.659000000000006,"text":"Despite a rare share price jump last week, on opening a ground testing facility, widows and orphans may opt to steer clear. "},{"start":55.527,"text":"Shares are still a fraction of the peak. "}],[{"start":58.7,"text":"One rung down, aerospace and defence contractors are muscling in. "},{"start":63.167,"text":"Space last year accounted for 18 per cent of sales at Lockheed Martin, inching up to 19 per cent in the first quarter of this year. "},{"start":70.10900000000001,"text":"The unit is marginally less profitable than other units. "}],[{"start":73.71000000000001,"text":"Space systems provided more than a third of revenues at Northrop Grumman last year; margins of 8.7 per cent below defence and mission systems. "},{"start":81.88900000000001,"text":"In practice total space exposure — including non-civilian — is likely to be bigger within the sector. "}],[{"start":null,"text":""}],[{"start":88.47000000000001,"text":"Expect that trajectory to continue as projects come down the line in areas like communications, logistics and transport. "},{"start":95.31200000000001,"text":"Northrop Grumman earlier this year won a contract to plan for a railroad on the moon — the very infrastructure that helped fuel earthbound America’s economic rise. "}],[{"start":104.41000000000001,"text":"M&A activity in the sector, while inevitably subject to heavy regulatory oversight, is ratcheting up. "},{"start":110.46400000000001,"text":"Antitrust concerns stymied Lockheed Martin’s $4.4bn bid to buy Aerojet Rocketdyne in 2022, leaving L3Harris to carry off the prize a year or so later for $4.7bn. "},{"start":121.93200000000002,"text":"BAE Systems in February sealed its $5.6bn acquisition of Ball Aerospace. "}],[{"start":128.51000000000002,"text":"Commoditisation is under way: SpaceX is closing in on fielding a vehicle that could reduce cost per kilogramme to low earth orbit by 50-80 times. "},{"start":137.127,"text":"Reduced costs like these, Bain says, will help reshape established portfolios and consolidate tiddlers. "}],[{"start":143.71,"text":"Of these there are plenty, especially in specialist areas such as clearing space debris. "},{"start":148.78900000000002,"text":"Some have launched on to public markets, before falling spectacularly to earth, with tales of abortive launches and rocket-fuelled cash burn. "}],[{"start":157.35000000000002,"text":"Momentus, a commercial space company once flirting with a $1bn market cap, is now worth under $8mn. "},{"start":164.76700000000002,"text":"It is under notice from Nasdaq to file its delayed 10-K — a form detailing its financial performance — to retain its listing. "},{"start":171.82200000000003,"text":"Astra Space is returning to private hands after shrinking from near-$4bn in 2021 to $15mn. "}],[{"start":179.39000000000001,"text":"Take heed: this is not a smooth ride. "},{"start":182.24400000000003,"text":"Government budgets are shaky. "},{"start":184.062,"text":"Russia’s glory days are fast fading, both in terms of launches and funding. "},{"start":188.479,"text":"In the US, Nasa’s budget requests were pruned by $2bn-plus for this year and next, to $24.9bn and $25.4bn respectively. "}],[{"start":198.91000000000003,"text":"As India demonstrated with last year’s successful controlled landing of the $75mn Chandrayaan-3 mission, big budgets are not mandatory everywhere in the world. "}],[{"start":209.02000000000004,"text":"That matters since, for at least a while yet, governments remain the biggest customers. "},{"start":214.01200000000003,"text":"Mishaps, too, are far from uncommon — see the (admittedly accident prone) Boeing spacecraft’s aborted launch this week after a problem was found with a valve. "}],[{"start":223.98000000000005,"text":"Space investing, like any moon shot, requires two things of investors: diversification and long time horizons. "}],[{"start":230.83000000000004,"text":""}]],"url":"https://creatives.ftacademy.cn/album/154237-1715410185.mp3"}