Core view
In 2021, the military industry is booming in an all-round way, with high growth in aviation and informatization. It is expected that the boom will accelerate in 2022, and the acceleration in the field of aerospace and aerospace development deserves special attention. As the first year of the great cycle of national defense construction from “improving quality” to “increasing quantity”, we can see the overall prosperity of the industrial chain and the increase of revenue and profit growth of various sectors from the financial perspective. From the perspective of forward-looking indicators, the large amount of advance receipts received from the downstream general assembly also shows that the demand for weapons and equipment in the future of the 14th five year plan is still large, and the military industry is highly sustainable. From the downstream sector, the growth of aviation and information technology sector is very bright in the first three quarters of 2021: aviation is in the capacity-building period of equipment upgrading and upgrading, and will continue to grow at a high rate in the future, especially the aviation engine sub sector is expected to show a trend of strengthening prosperity; In the informatization sector, due to the improvement of equipment informatization rate + domestic substitution, the demand is still very strong in the future; Although the growth in the aerospace field is good, it may not be explosive because the order schedule is less than expected. With the gradual release of orders, the growth rate of the aerospace sector is expected to increase significantly in 2022.
When expanding production in the middle reaches of the industrial chain, the release of production capacity will drive the further growth of the whole industrial chain. From the comparison of industrial chain links, We found that the upstream company has (1) short product cycle (2) From 2020, the capacity expansion will be gradually released, and the scale effect brought by the improvement of capacity utilization will significantly accelerate the growth of revenue and profit. At the same time, we have also observed that the expansion of production in the middle reaches of the industrial chain is ongoing. It is expected that the capacity in the middle reaches of the industrial chain will be gradually released in 2022, so as to stimulate the upstream demand, promote the delivery of downstream products and drive the further development of the whole industrial chain Growth. In terms of industrial chain selection, we believe that the upstream will still maintain rapid growth, and the middle and downstream enterprises are expected to usher in the upward movement of the profit growth center driven by the reform of state-owned enterprises. In addition, we will continue to pay attention to the progress of the reform of central enterprises and state-owned enterprises, and believe that the implementation of these reform measures will bring new vitality and valuation flexibility to the military industry sector dominated by central enterprises.
The performance is high, the growth certainty is high, the valuation is still in a reasonable range, and the volatility of the sector has weakened. Since 2021, the military industry has been in a new stage of development and has entered a long business cycle. The horizontal comparison of the valuation of the military industry sector is still in a high position, mainly due to the increased uncertainty of the macro environment over the past 18 years. Compared with China’s weak demand and slow economic growth, the deterministic advantages of national defense construction appear, Supported by the high prosperity and good performance of the industry (there is a certain lag in static valuation), and the valuation center of the military industry sector moves upward. On the other hand, the valuation differentiation within the military industry sector is also obvious. The target valuation of the middle and upper reaches corresponds to more than 30x ~ 40x next year, which is still in a reasonably low position, matching the compound growth rate of the next year and the next. In addition, although the 2021q1 sector has been adjusted violently, with the release of the quarterly statements, the market is The consistent expectation of the growth sustainability of the military industry has gradually improved. At the same time, the comparative advantage of the national consumption attribute just needed by the military industry in the current environment has gradually emerged. Comprehensive factors have steadily reduced the volatility of the sector (the proportion of institutional positions has increased).
Investment proposal and investment object
It is recommended to focus on high-quality companies in the boom track, such as: Aecc Aviation Power Co Ltd(600893) (600893, Unrated), Avicopter Plc(600038) (600038, overweight), Gaona Aero Material Co.Ltd(300034) (300034, buy), Guizhou Space Appliance Co.Ltd(002025) (002025, buy), Addsino Co.Ltd(000547) (000547, buy), Avic Jonhon Optronic Technology Co.Ltd(002179) (002179, buy), China Zhenhua (Group) Science & Technology Co.Ltd(000733) (000733, overweight), Avic Heavy Machinery Co.Ltd(600765) (600765, buy), Anhui Truchum Advanced Materials And Technology Co.Ltd(002171) (002171, buy), Zhonghang Electronic Measuring Instruments Co.Ltd(300114) (300114, buy) Weihai Guangwei Composites Co.Ltd(300699) (300699, buy), Chengdu Leejun Industrial Co.Ltd(002651) (002651, buy), Fujian Torch Electron Technology Co.Ltd(603678) (603678, Unrated), Hubei Feilihua Quartz Glass Co.Ltd(300395) (300395, buy), Anhui Yingliu Electromechanical Co.Ltd(603308) (603308, Unrated), Western Metal Materials Co.Ltd(002149) (002149, Unrated), Xi’An Triangle Defense Co.Ltd(300775) (300775, Unrated), Western Superconducting Technologies Co.Ltd(688122) (688122, Unrated), Shanghai Hugong Electric Group Co.Ltd(603131) (603131, Unrated), Chengdu Jouav Automation Tech Co.Ltd(688070) (688070, Unrated), Harbin Xinguang Optic-Electronics Technology Co.Ltd(688011) (688011, buy) Baoji Titanium Industry Co.Ltd(600456) (600456, Unrated), Nanjing Quanxin Cable Technology Co.Ltd(300447) (300447, Unrated), Glarun Technology Co.Ltd(600562) (600562, Unrated), Chengdu Spaceon Electronics Co.Ltd(002935) (002935, Unrated), Hebei Sinopack Electronic Technology Co.Ltd(003031) (003031, Unrated), Sun Create Electronics Co.Ltd(600990) (600990, bought), Avic Xi’An Aircraft Industry Group Company Ltd(000768) (000768, Unrated), Xiangtan Electric Manufacturing Co.Ltd(600416) (600416, Unrated), Gci Science & Technology Co.Ltd(002544) (002544, Unrated), etc.
Risk warning: the delivery progress is less than expected; Competition pattern and share fluctuation risk; Risk of product price decline; The progress of military orders and revenue recognition is less than expected
