1. Market review this week
This week, the Shenwan defense and military industry index rose 1.96%, the Shanghai Composite Index rose 0.8%, the gem index rose 2.93%, the Shanghai and Shenzhen 300 index rose 1.08%, and the decline of the defense and military industry sector ranked 15th among the 31 Shenwan level industries. The biggest increase was 2% on Tuesday (February 15) and 0.96% on Wednesday (February 16). As of Friday's closing, the PE (TTM) of Shenwan national defense and military industry sector was 60.12 times, the aviation equipment in each sub sector was 62.90 times, the aerospace equipment was 62.68 times, the ground military equipment was 53.41 times, the military electronics was 48.05 times and the navigation equipment was 134.58 times. At present, the PE (TTM) quantile of Shenwan national defense military industry index in the past decade is 29.88%, and the PE (TTM) quantiles of aviation equipment, aerospace equipment, ground military equipment, military electronics and navigation equipment are 21.97%, 27.15%, 26.37%, 19.53% and 74.61% respectively.
2. The Central Military Commission issued the regulations on the work of military training textbooks, and it is expected that the quantity of expendable weapons and equipment will continue to increase
According to the report on People.Cn Co.Ltd(603000) February 17, in order to give better play to the basic and supporting role of the construction of military training textbooks in the transformation and upgrading of military training, the organs of the Central Military Commission recently issued the regulations on the work of military training textbooks. The "Regulations" consists of 9 chapters and 49 articles, focusing on achieving five objectives: (1) reshape the military training textbook system, and use one regulation to uniformly standardize the teaching materials of military training, college education and vocational education for the first time; (2) Highlight the characteristics of the times in the compilation and R & D of teaching materials, not only inherit the compilation experience of traditional paper teaching materials, but also advocate the R & D and use of new forms of teaching materials, and establish the guidance of encouraging innovation, transforming achievements and entering practice; (3) Strictly control the quality of teaching materials, implement all links of project approval, preparation and R & D process control and final examination of teaching materials, strengthen the rights and responsibilities of examiners, and strengthen the trial inspection, opinion feedback, revision and update of teaching materials; (4) Promote the digital construction of teaching materials, regularly publish and update the catalogue and list of military training teaching materials of the whole army, establish and improve the digital teaching material database, and unblock the information query and application channels of military and colleges for required teaching materials; (5) Clarify the identification of teaching material achievements, focus on the quality identification of national planning major core curriculum teaching materials and military unified compilation teaching materials, and identify the results of teaching material compilation, R & D, review and approval personnel in combination with the existing military teaching and scientific research performance evaluation regulations. Since 2012, the top level has repeatedly stressed that the whole army should strengthen practical military training. By 2022, the Central Military Commission has signed a training mobilization order for five consecutive years. With the in-depth implementation of practical training, the intensity and frequency of practical training of our army have increased significantly, and the demand for expendable weapons and equipment has been strong for a long time, which has effectively supported the high prosperity of the military industry.
3. The export version of j-10ce was exposed for the first time, and the scale of China's military trade market is expected to grow further
According to dongfang.com reported on February 16, at least two j-10c fighters coated with Pakistan have taxied and tested at an airport in China. This batch of j-10ce fighters (based on the foreign trade model of j-10c) use domestic "Taihang" engines, which is the first military trade export of this series of engines. According to the report of AVIC Tongfei official micro on February 15, AVIC made another appearance at the Singapore air show after four years, comprehensively displaying various types of high-tech aviation foreign trade products, including fighter, trainer, helicopter, UAV and regional aircraft. According to the report of AVIC official micro on February 17, Malawi's ambassador to China visited AVIC Xi'an civil aircraft on the same day and participated in the phased acceptance summary meeting of Malawi's "Xinzhou" 600 aircraft project. The "three accompanying" and recommended spare parts of the aircraft have passed the inspection, and the "Xinzhou" 600 aircraft is about to be delivered to Malawi. In recent years, the global local conflicts continue, and the geopolitical situation is volatile or normal. The military trade industry is an important way to broaden the market space of the military industry and enhance the international political and military influence. According to SIPRI research data, China's arms exports accounted for only 5.2% of the global market from 2016 to 2020, ranking fifth in the world, which is not consistent with China's current status as a military power. Compared with China's military products market, the military trade market has broad space, high profit margin and short development cycle. It is expected to become an important window for the dividend of high-end technology and talents of China's military products. As the global geopolitical situation continues to be tense, the scale of China's military trade market is expected to grow further, focusing on high-quality targets such as missiles and UAVs.
4. Key recommendations this week
1) focus on recommending military electronic components with sustained and high performance: China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Zhuzhou Hongda Electronics Corp.Ltd(300726) , Beijing Yuanliu Hongyuan Electronic Technology Co.Ltd(603267) , Unigroup Guoxin Microelectronics Co.Ltd(002049) .
2) focus on recommending midstream aviation manufacturing targets with scale effect gradually emerging and comprehensive supporting capacity expected to be greatly improved: Avic Heavy Machinery Co.Ltd(600765) , Chengdu Ald Aviation Manufacturing Corporation(300696) , Chengdu Haoneng Technology Co.Ltd(603809) , Anhui Yingliu Electromechanical Co.Ltd(603308) .
3) focus on recommending the overall and key systems of weapons and equipment with monopoly and scarcity and huge long-term growth space: Avic Shenyang Aircraft Company Limited(600760) , Aecc Aviation Power Co Ltd(600893) , Avicopter Plc(600038) , Aecc Aero-Engine Control Co.Ltd(000738) and Wuhan Guide Infrared Co.Ltd(002414) .
4) it is suggested to pay attention to the beneficiary objects of the mixed reform of state-owned enterprises: Chengdu Spaceon Electronics Co.Ltd(002935) , Aerospace Ch Uav Co.Ltd(002389) , Avic Xi'An Aircraft Industry Group Company Ltd(000768) , Avicopter Plc(600038) , Guizhou Space Appliance Co.Ltd(002025) and Sun Create Electronics Co.Ltd(600990) .
Risk warning: the release and delivery of military orders are not as expected; Performance growth is less than expected; The reform of state-owned enterprises did not advance as expected.
