Plate review
Last week’s performance: from December 6 to December 10, social services, food and beverage in all sectors of Shenwan level led the rise, with an increase of 9.47% and 5.47% respectively, while national defense and military industry and mining led the decline, with a decrease of 3.11% and 1.90% respectively. The defense industry index fell 3.11%.
Last week, the top ten stocks in the military sector were: Yunnan Xiyi Industrial Co.Ltd(002265) (61.18%), Hunan Tyen Machinery Co.Ltd(600698) (61.14%), Chengdu Leejun Industrial Co.Ltd(002651) (17.89%), Shanghai Hugong Electric Group Co.Ltd(603131) (14.58%), China Marine Information Electronics Company Limited(600764) (10.33%), Changchun Up Optotech Co.Ltd(002338) (10.01%), Weihai Guangwei Composites Co.Ltd(300699) (5.13%), Jiangsu Toland Alloy Co.Ltd(300855) (5.05%), Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) (4.53%) and Xi’An Chenxi Aviation Technology Corp.Ltd(300581) (3.25%). The top ten stocks with declines were: Wuxi Hyatech Co.Ltd(688510) (- 11.18%), Gaona Aero Material Co.Ltd(300034) (- 11.03%), Guoguang Electric Co.Ltd.Chengdu(688776) (- 10.97%), Hubei Feilihua Quartz Glass Co.Ltd(300395) (- 9.87%), Avic Xi’An Aircraft Industry Group Company Ltd(000768) (- 8.96%), Chengdu M&S Electronics Technology Co.Ltd(688311) (- 8.73%), Zhongzhi shares (- 8.01%), RuiChuang micro nano (- 7.91%), AVIC Optoelectronics (- 7.69%), and Beijing Zhongkehaixun Digital S&T Co.Ltd(300810) (- 7.69%).
Last week’s views and investment suggestions
The central government requires that next year’s economic work should be “steady and seek progress while maintaining stability”. Looking forward to 2022, the counter cyclical attribute of military industry is expected to provide relative returns for funds and become one of the industries worthy of attention.
Key companies in the military industry had excellent financial performance in the first three quarters of 2021. The market’s view of “accelerating the assembly of military equipment and the upward inflection point of sector performance and sustained high-speed release” since the end of the 13th five year plan continued to be fully verified, which means that the military sector is expected to continue to receive financial attention and the market funds are active, Individual stocks should be excavated from top to bottom and from bottom to top.
In the medium and long term, we will continue to focus on high-profile sub fields and increase allocation, including aviation, aerospace, new materials, informatization, etc; The reform of state-owned military enterprises, which has not been paid attention to for a long time, has won the favor of funds again. The targets such as Yunnan Xiyi Industrial Co.Ltd(002265) , Hunan Tyen Machinery Co.Ltd(600698) , Phenix Optical Company Limited(600071) , Changchun Up Optotech Co.Ltd(002338) have been continuously connected. We suggest mining the varieties with asset injection expectation / equity incentive expectation / equity incentive expectation from bottom to top along the main line of state-owned military enterprise reform. Focus on: 1) aviation: aviation equipment benefits from the gap between the total amount and generations. At present, the country is in a critical period of military aircraft upgrading, and the demand for new fighters has increased greatly. It is expected that advanced fighters will continue to be produced in large quantities in the next few years, It is recommended to pay attention to Avic Xi’An Aircraft Industry Group Company Ltd(000768) (equity incentive expectation), Avicopter Plc(600038) , Avic Electromechanical Systems Co.Ltd(002013) , Avic Heavy Machinery Co.Ltd(600765) , Aecc Aviation Power Co Ltd(600893) , Avic Shenyang Aircraft Company Limited(600760) ; 2) Aerospace: precision guided weapons benefit from the increased consumption of incremental weapon platform mounting + new product replacement and upgrading + live ammunition drill. It is recommended to pay attention to Beijing Relpow Technology Co.Ltd(300593) , Chengdu M&S Electronics Technology Co.Ltd(688311) , Chengdu Tianjian Technology Co.Ltd(002977) ； 3) New materials: benefiting from factors such as the large volume of weapons and equipment in the aerospace field and the increase in the proportion of carrier consumption + localization substitution, the new materials sector is expected to maintain a high outlook. It is recommended to pay attention to Western Superconducting Technologies Co.Ltd(688122) , Baoji Titanium Industry Co.Ltd(600456) , Fushun Special Steel Co.Ltd(600399) , Gaona Aero Material Co.Ltd(300034) , Jiangsu Toland Alloy Co.Ltd(300855) , Sinofibers Technology Co.Ltd(300777) , Weihai Guangwei Composites Co.Ltd(300699) , Avic Aviation High-Technology Co.Ltd(600862) . 4) Informatization: the industry benefits from the deepening trend of military informatization and the large-scale growth of many downstream fields. With the acceleration of military modernization and the superposition of factors such as localization substitution, the informatization sub section is expected to usher in a period of rapid development. It is recommended to pay attention to Avic Jonhon Optronic Technology Co.Ltd(002179) , Guizhou Space Appliance Co.Ltd(002025) , Changsha Jingjia Microelectronics Co.Ltd(300474) , Raytron Technology Co.Ltd(688002) , Unigroup Guoxin Microelectronics Co.Ltd(002049) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Beijing Yuanliu Hongyuan Electronic Technology Co.Ltd(603267) , Fujian Torch Electron Technology Co.Ltd(603678) , Zhuzhou Hongda Electronics Corp.Ltd(300726) ; 5) Reform of state-owned enterprises: for those who benefit from asset injection expectation / equity incentive expectation / have done equity incentive, it is recommended to pay attention to Avic Xi’An Aircraft Industry Group Company Ltd(000768) , Sun Create Electronics Co.Ltd(600990) ; According to the division of military industry groups, we should pay attention to the listed companies under the Aerospace Department, the electronics department and the weapons department.
Risk statement
Military spending is lower than expected; The reform of state-owned enterprises in the military industry has been slower than expected.
