The market value of positions of public funds in 2021q4 military industry sector reached a new high, and the active allocation continued to rise
In 2021q4, the total market value of military holdings in the heavy positions of public funds was 140.377 billion yuan, which hit a record high after Q3, with a position ratio of 4.78%, up 0.85pct month on month; After excluding passive funds and other theme funds in the military industry, the proportion of active allocation in the military industry was 4.29%, up 1.53pct month on month, maintaining a high level, reflecting the significantly strengthened willingness of public funds to actively allocate individual stocks in the military industry and continuously accelerate the allocation of military sector.
The proportion of positions held by state-owned enterprises began to rise, and the shareholding concentration of the military industry decreased slightly
By the end of the fourth quarter, the position proportion of state-owned enterprises was 73.89%, and the position proportion increased by 1.58 percentage points. The proportion of positions held by civil service companies was 26.11%, down month on month. We believe that the proportion of positions held by state-owned enterprises continues to increase, or with the further implementation of the three-year reform plan of state-owned enterprises, the fundamentals of military state-owned enterprises have been improved, the vitality of enterprises has been continuously improved, and the recognition of military state-owned enterprises has been continuously improved; The company’s main business is relatively focused and its performance is relatively fully released. It is expected that the performance of state-owned enterprises and civilian military enterprises will be favored under the background of military training and preparation for the 14th five year plan.
In terms of concentration, the top ten positions of military industry accounted for 64.78% (the top ten positions of Q3 accounted for 68.79%), the top twenty positions accounted for 85.19% (the top twenty positions of Q3 accounted for 87.08%), and the shareholding concentration remained stable and decreased slightly.
The top ten stocks with heavy positions in 2021q4 are Unigroup Guoxin Microelectronics Co.Ltd(002049) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Avic Jonhon Optronic Technology Co.Ltd(002179) , Fushun Special Steel Co.Ltd(600399) , Aecc Aviation Power Co Ltd(600893) , Avic Shenyang Aircraft Company Limited(600760) , Avic Electromechanical Systems Co.Ltd(002013) , Avic Aviation High-Technology Co.Ltd(600862) , Fujian Torch Electron Technology Co.Ltd(603678) , Western Superconducting Technologies Co.Ltd(688122) , and the aviation sector and information sector are still the key configuration; Compared with 2021q4, 2021q3 Western Superconducting Technologies Co.Ltd(688122) is listed and Beijing Yuanliu Hongyuan Electronic Technology Co.Ltd(603267) is listed; 2021q4 the top ten state-owned enterprises with heavy positions are Unigroup Guoxin Microelectronics Co.Ltd(002049) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Avic Jonhon Optronic Technology Co.Ltd(002179) , Aecc Aviation Power Co Ltd(600893) , Avic Shenyang Aircraft Company Limited(600760) , Avic Electromechanical Systems Co.Ltd(002013) , Avic Aviation High-Technology Co.Ltd(600862) , Western Superconducting Technologies Co.Ltd(688122) , Avic Heavy Machinery Co.Ltd(600765) , Guizhou Space Appliance Co.Ltd(002025) ; In 2021q4, the top ten civilian military stocks with heavy positions are Fushun Special Steel Co.Ltd(600399) , Fujian Torch Electron Technology Co.Ltd(603678) , Beijing Yuanliu Hongyuan Electronic Technology Co.Ltd(603267) , Hubei Feilihua Quartz Glass Co.Ltd(300395) , Beijing Beimo High-Tech Frictional Material Co.Ltd(002985) , Raytron Technology Co.Ltd(688002) , Xi’An Triangle Defense Co.Ltd(300775) , Beijing Relpow Technology Co.Ltd(300593) , Zhuzhou Hongda Electronics Corp.Ltd(300726) , Anhui Yingliu Electromechanical Co.Ltd(603308) .
The top ten positions in 2021q4 are Unigroup Guoxin Microelectronics Co.Ltd(002049) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Aecc Aviation Power Co Ltd(600893) , Baoji Titanium Industry Co.Ltd(600456) , Avic Heavy Machinery Co.Ltd(600765) , Western Superconducting Technologies Co.Ltd(688122) , Avic Jonhon Optronic Technology Co.Ltd(002179) , Fushun Special Steel Co.Ltd(600399) , Guizhou Space Appliance Co.Ltd(002025) , Avicopter Plc(600038) . The top ten positions reduction in 2021q4 are Avic Shenyang Aircraft Company Limited(600760) , Raytron Technology Co.Ltd(688002) , Jiangxi Hongdu Aviation Industry Co.Ltd(600316) , Sinofibers Technology Co.Ltd(300777) , Beijing Yuanliu Hongyuan Electronic Technology Co.Ltd(603267) , Zhejiang Dali Technology Co.Ltd(002214) , Avic Aviation High-Technology Co.Ltd(600862) , Weihai Guangtai Airport Equipment Co.Ltd(002111) , Beijing Beimo High-Tech Frictional Material Co.Ltd(002985) , Jushri Technologies Inc(300762) .
Industry perspective:
1) in the third quarterly report, the industry maintained high growth, and the prosperity of the industry continued to materialize. After the amendment, the 2021q3 military industry achieved a growth rate of 24.20% in operating revenue and 51.00% in net profit attributable to the parent company. Among the 29 A-share industries, the growth rate of net profit attributable to the parent company ranked ninth, up 3 places from H1, and in the top position in the middle. The four seasons report that has been disclosed is generally in line with expectations, which once again verifies our judgment on the high outlook of the industry. It is expected that during the “14th five year plan” period, with the batch production and delivery of key downstream Aerospace models, the demand side is expected to maintain high-speed growth, and the leading companies in all links of the industrial chain will also continue to make profits. It is suggested to choose the report side, which can not only continuously reflect their own growth, but also confirm the prosperity of the industry, and the valuation matches the performance growth.
2) accelerate the allocation of funds and increase the proportion of active allocation of public offering institutions. Among the heavy positions held by public funds, the total market value of military holdings was 140.377 billion yuan, a record high, with a position ratio of 4.78%, up 0.85pct month on month; After excluding the theme funds of military industry and other industries, the proportion of active allocation of military industry was 4.29%, up 1.52pct month on month, still at a high level, reflecting the significantly strengthened willingness of public funds to actively allocate individual stocks of military industry and continuously accelerate the allocation of military industry sector. Among them, the top ten stocks of military positions are Unigroup Guoxin Microelectronics Co.Ltd(002049) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Avic Jonhon Optronic Technology Co.Ltd(002179) , Fushun Special Steel Co.Ltd(600399) , Aecc Aviation Power Co Ltd(600893) , Avic Shenyang Aircraft Company Limited(600760) , Avic Electromechanical Systems Co.Ltd(002013) , Avic Aviation High-Technology Co.Ltd(600862) , Fujian Torch Electron Technology Co.Ltd(603678) , Western Superconducting Technologies Co.Ltd(688122) . The aviation sector has become the key configuration, and the proportion of information sector has decreased slightly; Historically, there is still much room for the proportion of military positions to rise. With the gradual realization of industry fundamentals, it is expected that there will be constant capital attention and allocation of military sectors. In addition, the allocation of passive funds and leveraged funds, such as military ETF and margin funds, declined in 2021q1, but Q2 has continued to improve. It is expected that there will be further increase in the future.
3) the valuation of most objects has returned to a reasonable range, and the valuation still matches the performance growth. Taking the share price on January 27, 2022 as the benchmark, the current dynamic PE of the military industry sector (Anxin military industry stock pool) is 66 times, corresponding to the 22-year valuation of about 35 times. Among them, the weight of the main engine plant is relatively high, and the valuation is basically more than 50 times. After excluding the main engine plant, the valuation of the sector is about 32 times, and the P / E ratio of some high boom companies is even about 30 times, We expect that the performance of the industry from 2022 to 2023 will increase by more than 30% under the high climate of the industry. At present, most of the subject valuations with rapid performance growth have returned to reasonable, realizing the matching between valuation and performance growth. Among them, the benefit of the main engine factory logo is that the prosperity of aerospace equipment in the 14th five year plan is upward, the long-term space is expected to be opened, and it enjoys the valuation of high-end equipment manufacturing; The compound growth rate of parts performance of state-owned enterprises is expected to remain above 20%, and there are still expectations of profitability improvement and governance improvement, and the performance and valuation are expected to rise both; The targets of new materials are mainly high-temperature alloy, titanium alloy and carbon fiber composite materials, which benefit from the triple drive of large volume of weapons and equipment + increase of single machine consumption and increase of localization rate. Typical companies may maintain an increase of 30% – 40% in the next three years. The current valuation is still reasonably low and has outstanding growth in the future; The subject matter of informatization has certain TMT attribute, and the overall valuation level is high, but there are many subdivisions and differentiation. For example, the performance growth in the direction of components and infrared chips is highly deterministic, and some companies are expected to achieve 40-50% growth in 2021, and are still expected to enjoy the valuation premium; The civil military mostly adopts segment valuation, or has a certain elastic space.
Focus on aviation, aerospace, informatization and new materials:
1) aviation equipment: both the surrounding situation and the construction of Navy and air force have put forward new requirements for military aircraft. At present, there is a large room for improvement in the number and structure of Chinese military aircraft. It is expected that with the national defense budget inclined to weapons and equipment, especially the air force and Navy, it is expected to accelerate the upgrading of military aircraft.
The disclosure of large contract liabilities by many companies in the early stage may further improve the cash flow of the industrial chain and promote the production and delivery of products. We believe that aviation equipment will show a high boom during the 14th Five Year Plan period, driving the improvement of industrial chain performance. In addition, the reform of military pricing mechanism and the increase of equity incentive scheme will also promote the improvement of industry profit level. It is suggested to pay attention to: [ Avic Shenyang Aircraft Company Limited(600760) ], [ Avic Xi’An Aircraft Industry Group Company Ltd(000768) ], [ Jiangxi Hongdu Aviation Industry Co.Ltd(600316) ], [ Aecc Aviation Power Co Ltd(600893) ], [ Avic Electromechanical Systems Co.Ltd(002013) ], [ Hefei Jianghang Aircraft Equipment Co.Ltd(688586) ], [ Avic Jonhon Optronic Technology Co.Ltd(002179) ], [ Avic Heavy Machinery Co.Ltd(600765) ], [ Wuxi Paike New Materials Technology Co.Ltd(605123) ], [ Guizhou Aviation Technical Development Co.Ltd(688239) ], [ Chengdu Ald Aviation Manufacturing Corporation(300696) ], [ Jiangsu Maixinlin Aviation Science And Technology Corp(688685) ].
2) aerospace equipment: in terms of missile weapons and equipment, the main driving factors of the missile industry mainly come from: the first is the iterative period, the second is the increase in the demand for strategic reserves, and the third is driven by practical training. The missile sector may be the most flexible segment during the 14th Five Year Plan period, which will bring rapid performance thickening of relevant listed companies. Pay attention to the overall opportunities of the missile sector, and give priority to the targets with high performance flexibility and high proportion of missile business. It is suggested to pay attention to: [ Guizhou Space Appliance Co.Ltd(002025) ] and [ Beijing Relpow Technology Co.Ltd(300593) ].
In terms of Satellite Internet, Beidou navigation: the year-on-year growth rate of Beidou satellite navigation industrial chain began to increase in 2021, and it is expected to maintain a high growth rate in 2022 and 2023. In Beidou navigation industrial chain, the demand for Beidou navigation chips and Beidou navigation terminals increased rapidly; Satellite internet field: China Spacesat Co.Ltd(600118) network group is expected to become the main force of China Spacesat Co.Ltd(600118) Internet. At present, although China Spacesat Co.Ltd(600118) Internet is still in the early stage of development, Satellite Internet will still become an important development direction of 6G mobile communication. It is suggested to pay attention to: [ Chengdu Corpro Technology Co.Ltd(300101) ] and [ Chengdu M&S Electronics Technology Co.Ltd(688311) ].
4) informatization sector: due to factors such as the localization process, military modernization and the accelerated renewal of new models, it has continued to surpass the growth of the industry since 2018, focusing on military semiconductors, upstream electronic components, radar and electronic countermeasures, communication, navigation and remote sensing, and some companies have taken the lead in entering the stage of rapid growth, It is expected to continue in 2022. It is suggested to pay attention to: [ China Zhenhua (Group) Science & Technology Co.Ltd(000733) ], [ Unigroup Guoxin Microelectronics Co.Ltd(002049) ], [ Chengdu Zhimingda Electronics Co.Ltd(688636) ].
5) new materials: it is suggested to focus on the direction of superalloys, titanium alloys and carbon fiber composites. Military new material technology has basically achieved self-control and represents China’s leading level, and the dual / multi flow system of model certification makes suppliers limited, and the competition pattern at the supply side is good. At the demand side, due to the large volume of main battle models and supporting engines, the proportion of new material application continues to increase, the outsourcing proportion of main engine manufacturers, domestic substitution and other factors, It is expected that the future growth of the industry is highly deterministic, and the scale effect will continue to appear after the demand increases, driving the continuous decline of unit cost. Therefore, the gross profit margin of the industry may still have room to improve and gradually realize to profit, and has the possibility of urgent development to the civil market, with good long-term growth. It is suggested to pay attention to: [ Baoji Titanium Industry Co.Ltd(600456) ], [ Gaona Aero Material Co.Ltd(300034) ], [ Western Superconducting Technologies Co.Ltd(688122) ], [ Avic Aviation High-Technology Co.Ltd(600862) ].
Risk warning: the replacement of weapons and equipment is not as expected; The development of new missile models was not as expected
