Core ideas of this week
1. Among the 52 listed companies that we focus on, 35 have issued performance forecasts or annual performance express. The total net profit attributable to the parent company of 35 listed companies is 19.504-18.849 billion yuan, with a change range of about 25.08% – 20.88% compared with the same period of last year, and the growth trend is stable. Among them, there are 8 listed companies with a median growth rate of more than 100% and 13 listed companies with a median growth rate of more than 50%.
2. Among the 35 listed companies that have issued the notice, the target at the upstream of the overall industrial chain performs better as a whole. Among the 16 key upstream companies that have disclosed the performance forecast, there are 6 listed companies related to military electronics and 10 listed companies related to military materials. The net profit attributable to the parent company of China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Unigroup Guoxin Microelectronics Co.Ltd(002049) and other military electronic leaders doubled in 2021, and the growth center of net profit attributable to the parent company of Zhuzhou Hongda Electronics Corp.Ltd(300726) and other three listed companies also exceeded 50%. Among the listed companies related to military materials, Anhui Truchum Advanced Materials And Technology Co.Ltd(002171) and Yantai Tayho Advanced Materials Co.Ltd(002254) doubled their growth, Hubei Feilihua Quartz Glass Co.Ltd(300395) , Western Superconducting Technologies Co.Ltd(688122) , Baoji Titanium Industry Co.Ltd(600456) and other six listed companies achieved more than 50% performance growth, and the remaining Weihai Guangwei Composites Co.Ltd(300699) net profit attributable to the parent company also achieved stable and rapid growth; Among the 15 listed companies in the midstream, 3 have achieved a growth rate of more than 100% of the net profit attributable to the parent company, 5 have achieved a growth rate of more than 50%, and the remaining 6 listed companies have achieved stable and rapid growth; The number of performance forecast disclosure of listed companies of the most downstream main engine plant is small, and the performance of individual companies cannot represent the trend of the whole industry or sub industries, so they are not representative for the time being.
3. The annual report forecast of core enterprises accounts for a high proportion of high growth, and the overall high boom trend of the industry remains unchanged. From the perspective of the 20 core military enterprises that have released the performance forecast, the overall net profit attributable to the parent company has achieved a rapid growth of 67.89% – 82.20%, and the net profit excluding non attributable to the parent company has increased by 76.55% – 93.60%. Among them, the performance of upstream, middle and downstream enterprises in the industrial chain is still outstanding. For example, Unigroup Guoxin Microelectronics Co.Ltd(002049) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Beijing Relpow Technology Co.Ltd(300593) in 2021, the net profit attributable to the parent achieved a year-on-year growth of more than 190%, more than 120% and more than 105% respectively, and the growth rate of net profit excluding non attributable to the parent was higher. Although the performance growth rate of some companies is lower than expected, the high growth rate of annual report forecast / Express is still high, indicating that the overall high prosperity trend of the industry remains unchanged.
4. The high cost performance of the sector is more prominent, and it is expected to rebound at the bottom. It is suggested to strengthen the allocation firmly. Since the beginning of 2022, the CSI military industry index has fallen by nearly 20%, the sector valuation has been fully digested, and the high cost performance has become more prominent. At present, the overall PE of the military industry sector is 56 times, at a historical low. From the core key companies we track, the current military sector pe37 Five times. The average valuation levels of upstream, midstream and downstream in 22 years were 32.6, 32.3 and 48.0 times respectively, corresponding to peg levels of 0.96, 0.74 and 1.71 in 22 years. We believe that at present, the military industry sector is at the key node of the diffusion from local prosperity to overall prosperity, and the performance acceleration inflection point of middle and downstream companies is expected to come. At present, the valuation level of the sector is equivalent to the lowest valuation in 21 years and has higher investment cost performance. It is suggested to firmly increase the allocation proportion, and the sector is expected to regain its upward trend after the final shock bottoming stage.
5. In terms of investment strategy, we judge that the current military industry is spreading from local prosperity to overall prosperity. The “14th five year plan” is expected to experience two rounds of capacity expansion, and we are optimistic about the whole military industry chain in 2022. Upstream of industrial chain: focus on recommending leading companies in relevant subdivided fields that meet the three standards of “large industry space, excellent competition pattern and low localization rate”, mainly including key raw materials, core components and other fields. Middle reaches of the industrial chain: focus on recommending leading companies in relevant subdivided fields that meet the three standards of “high entry barriers, strong system capacity and wide business scope”, mainly including composite materials and products, power supply system and other fields. Downstream of the industrial chain: focus on recommending leading companies of complete machines and core subsystems that meet the three standards of “strong actual combat demand, many reserve models and mass production nodes”, mainly including fighter, helicopter, large aircraft, aeroengine, radar and other fields.
6. Key recommended combinations
Upstream: Weihai Guangwei Composites Co.Ltd(300699) , Zhuzhou Hongda Electronics Corp.Ltd(300726) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Avic Jonhon Optronic Technology Co.Ltd(002179) , Beijing Yuanliu Hongyuan Electronic Technology Co.Ltd(603267) , Hubei Feilihua Quartz Glass Co.Ltd(300395) ; Midstream: Xiangtan Electric Manufacturing Co.Ltd(600416) , Changsha Jingjia Microelectronics Co.Ltd(300474) , Wuhan Guide Infrared Co.Ltd(002414) , Aecc Aero-Engine Control Co.Ltd(000738) , Xi’An Bright Laser Technologies Co.Ltd(688333) , Avic Aviation High-Technology Co.Ltd(600862) , Avic Heavy Machinery Co.Ltd(600765) , Avic Electromechanical Systems Co.Ltd(002013) , Beijing Beimo High-Tech Frictional Material Co.Ltd(002985) , Chengdu Ald Aviation Manufacturing Corporation(300696) , Jiangsu Toland Alloy Co.Ltd(300855) , Wuxi Paike New Materials Technology Co.Ltd(605123) , Beijing Relpow Technology Co.Ltd(300593) , Guizhou Aviation Technical Development Co.Ltd(688239) ; Downstream: Avic Shenyang Aircraft Company Limited(600760) , Aecc Aviation Power Co Ltd(600893) , Avicopter Plc(600038) , Avic Xi’An Aircraft Industry Group Company Ltd(000768) , Glarun Technology Co.Ltd(600562) .
