The "minority" military industry sector is gradually becoming a "hot word" for investment.
Different from industries closer to the lives of ordinary people, such as medicine, infrastructure and consumption, if you want to have a deeper understanding of the military industry sector, you undoubtedly need a higher threshold of professional knowledge, but this does not prevent the industry from becoming the focus of investors.
Affected by good fundamentals and growth expectations, as well as the international situation, military industry once again became a "hot word" for investment after a few months of silence.
At the time of market shocks, the listed companies in this sector frequently have good performance, and the investment value gradually highlights between the changes: among the 28 listed companies that have disclosed the performance forecast in the sector, 26 companies have achieved positive returns, 21 have achieved turning losses into profits or profit growth, and many companies have doubled their profits.
Some fund companies believe that the situation of "two advances and one retreat" of the military industry index in the past two years is obvious, so they tend to think that the adjustment space of the index is no more than 25.6% of the previous round of increase. Therefore, it is predicted that there is not much room for downward exploration. In addition, according to the analysis of securities companies, the valuation of cursors on most core companies in the current sector in 2022 is only 30-35 times, while the growth rate is expected to remain at about 45% this year and next. Although the short-term rebound space of the industry will still be affected by the market style and overall risk appetite, it has configuration value after the overall stabilization.
funds continue to flow into the military industry
While investors are still interested in familiar sectors such as infrastructure, consumption and new energy, the unpopular field of military industry has gradually become the talk capital of the people with excellent performance. The CSI military industry index has increased by more than 130% in the past three years, significantly outperforming the Shanghai and Shenzhen index, and earned more than 14% in the volatile market last year, attracting a large number of funds.
According to the data, the proportion of military stocks held by the fund in the fourth quarter of 2021 increased significantly, reaching 5.10%, an increase of 1.08% month on month, the highest level in history, and achieved positive growth month on month for three consecutive quarters. However, in 2022, the military industry market experienced a certain degree of retreat with the fluctuation of the market. Galaxy Securities said that the current fund position adjustment action is obvious, and the proportion of fund positions may decline or become a foregone conclusion. However, with the release of industrial chain capacity, the high-profile momentum of the superimposed industry continues, and the investment value of the military industry sector is prominent. This index is expected to gradually stabilize and rise to more than 5%. The military industry market will "suppress first and then rise" in 2022.
however, the military sector was continuously copied by investors within the adjustment range. Take the national defense and military ETF as an example. From early December last year to February 25 this year, the share of the fund increased from 164 million to 317 million, nearly doubling in two months. Especially recently, catalyzed by the overseas situation, military industry has become one of the few bright spots in the general decline market. On February 24, when the overseas war broke out, heavyweights such as Aecc Aviation Power Co Ltd(600893) , Avic Jonhon Optronic Technology Co.Ltd(002179) , China Shipbuilding Industry Company Limited(601989) and others rose strongly, driving the CSI military industry index up nearly 4%, while the single day share of Cathay Pacific military industry ETF increased by more than 400 million. Based on the closing price, the capital inflow of the fund on that day exceeded 500 million yuan
Yang Chao, manager of Jinxin core competitiveness fund, believes that the high probability of Russia Ukraine conflict is expected to be limited to short-term local conflicts, which has less substantive impact on China's economy and more emotional impact. Therefore, there is no need to be overly pessimistic about the market. In addition, the military industry has led the decline this year and has medium and long-term investment opportunities. Although the geopolitical conflict between Russia and Ukraine will not have a great impact on the direct and substantive operation of military enterprises, it will improve the market attention of the military industry sector and accelerate the valuation and repair of the military industry sector. Therefore, the military industry sector is expected to usher in layout opportunities.
fund company's judgment: limited callback range
With the advent of the annual report season, the characteristics of "high growth" of military stocks have been verified again with successive pre increase announcements. According to statistics, among the 28 listed companies that have disclosed the performance forecast in the sector, 26 companies have achieved positive earnings, 21 have achieved turning losses into profits or profit growth, and Avic Heavy Machinery Co.Ltd(600765) , Xi'An Triangle Defense Co.Ltd(300775) and China Zhenhua (Group) Science & Technology Co.Ltd(000733) have doubled their profits.
In the short term, after a sharp correction in the early stage, the current dynamic P / E ratio of the military industry sector has dropped to 53.4 times (57 times in the central), and the valuation is in the historical 33% quantile, close to the bottom. Huabao Fund believes that based on the EPS driven logic, the situation of "advance, retreat and one" of the military industry index in the past two years is obvious. Therefore, it tends to think that the adjustment space of the index is no greater than the increase of 25.6% in the previous round. In terms of specific investment operations, "time can be used for space".
Looking forward to the medium-term market, Huabao Fund believes that in 2022, as the second year of the 14th five year plan for equipment procurement, bidding is expected to be intensively implemented, the overlapping capacity bottleneck will be broken, the prosperity of the industry may continue to improve, and the rapid growth of the industry in the next three years is still expected Citic Securities Company Limited(600030) also said that the "14th five year plan" is an unprecedented golden development period for the military industry. The valuation of most core cursors in 2022 is only 30-35 times, while the growth rate is expected to remain at about 45% this year and next. Although the short-term rebound space of the industry will still be affected by the market style and overall risk appetite, it has configuration value after the overall stabilization.
Yang Chao believes that in the medium and long term, China's current military spending as a proportion of GDP is still significantly lower than the world average, especially lower than that of the United States and other developed countries. With the improvement of China's economic volume, it is expected that military expenditure will maintain a certain growth rate for a long time in the future. In addition, with the improvement of military equipment level, the development space of overseas market is expected to be gradually opened, and foreign demand is expected to become a new growth point of military industry in the future.
Guotai Junan Securities Co.Ltd(601211) said that the intensification of the big country game is a long-term trend, increasing national defense investment is a necessary option, and the long-term trend of military industry is better. In 2027, we should ensure the realization of the Centennial goal of building the army, and it is expected to accelerate the improvement of weaknesses during the 14th Five Year Plan period. Based on past experience, it is expected that the 14th five year plan will be implemented step by step, and the profit statement and cash flow statement of the sector may continue to improve in 2022.
