At present, the US domestic market is still the main source of income for US military enterprises: We combed six US military listed companies with large market capitalization, including Raytheon technology, Honeywell international, Boeing, Lockheed Martin, Northrop Grumman and general dynamics. From the regional aspect of the proportion of revenue in 2021, the main revenue of the six companies comes from the United States, China / North America, of which Honeywell international has the lowest proportion of U.S. revenue, which is 60%; Raytheon technology accounted for the highest proportion of U.S. revenue, reaching 87%. Therefore, we believe that the US domestic market is still the main source of income for US military enterprises.
After the outbreak of the war, the share prices of most American top military enterprises can outperform the market: we have combed the share price trend of American military listed companies since 1990 and within one year after the outbreak of the crisis, and compared it with the three major indexes of Dow Jones industrial index, NASDAQ index and S & P 500 in the US stock market. The result is:
(1) one year after the outbreak of the Gulf War (the United States participated in the war), the stock prices of the three major indexes of US stocks and the top military industrial companies all rose, but the rise of military industrial companies was differentiated, and the rise was higher or lower than that of the index.
(2) one year after the outbreak of the war in Afghanistan (US participation in the war), the three major indexes of US stocks fell, and the share prices of most leading military enterprises outperformed the three indexes.
(3) one year after the outbreak of the Iraq War (the United States participated in the war), the three major indexes of U.S. stocks rose, and most of the stock prices of leading military enterprises outperformed the three indexes. In addition, the income and net profit attributable to the parent company of many military enterprises increased well in the current year and the following year.
(4) one year after the outbreak of the Crimean crisis (the United States did not participate in the war), the three major indexes of U.S. stocks rose, and most of the stock prices of leading military enterprises outperformed the three indexes.
From the market performance after the selected four events, most of the stock prices of leading US military enterprises can outperform the market index. The periodic changes in the share prices of some military enterprises in the United States did not show a strong correlation with the changes in the company's income and profit in the current year and the following year.
Investment suggestion: with the improvement of China's comprehensive national strength and the rapid growth of the national economy, it is necessary for China to strengthen national defense construction for a long time in the international environment of big country game. It is suggested that the investment in the military industry should follow the three main lines of military electronics, new military materials and the reform of military state-owned enterprises. Main line of new military materials, recommended Weihai Guangwei Composites Co.Ltd(300699) ; Main line of military electronics, recommended China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Avic Jonhon Optronic Technology Co.Ltd(002179) , Zhuzhou Hongda Electronics Corp.Ltd(300726) ; The main line of the reform of state-owned military enterprises, recommend China Cssc Holdings Limited(600150) , and pay attention to Glarun Technology Co.Ltd(600562) .
Risk analysis: (1) the risk of the impact of changes in the international political situation on the development of the military industry; (2) The risk of intensified competition in the defense equipment market; (3) The risk that the development progress of defense equipment is less than expected.
