Plate review
This week’s performance: from December 20 to December 24, agriculture, forestry, animal husbandry and fishery, food and beverage led the rise, with an increase of 6.56% and 3.76% respectively. Power equipment and non-ferrous metals led the decline, with a decrease of 7.37% and 5.13% respectively. Among them, the national defense industry index fell 1.54%.
The top ten stocks in the military industry sector this week are: Yunnan Xiyi Industrial Co.Ltd(002265) (27.92%), Avicopter Plc(600038) (8.81%), China Avionics Systems Co.Ltd(600372) (7.22%), Wuxi Hyatech Co.Ltd(688510) (6.41%), Geovis Technology Co.Ltd(688568) (5.59%), China Zhenhua (Group) Science & Technology Co.Ltd(000733) (5.50%), Hefei Jianghang Aircraft Equipment Co.Ltd(688586) (5.44%), Tianjin 712 Communication & Broadcasting Co.Ltd(603712) (4.97%), Shanghai Hugong Electric Group Co.Ltd(603131) (4.42%), Guizhou Space Appliance Co.Ltd(002025) (4.18%). The top ten stocks in the decline are: Western Metal Materials Co.Ltd(002149) (- 14.90%), Hunan Tyen Machinery Co.Ltd(600698) (- 14.14%), {003009 （-5.36%）、 China Cssc Holdings Limited(600150) （-9.81%）、 Jiangsu Toland Alloy Co.Ltd(300855) （-8.42%）、 Beijing Ctrowell Technology Corporation Limited(300455) （-8.36%）、 Chengdu Tianjian Technology Co.Ltd(002977) （-7.99%）、 Qinhuangdao Tianqin Equipment Manufacturing Co.Ltd(300922) （-7.85%）、 Jiangxi Xinyu Guoke Technology Co.Ltd(300722) （-7.54%）、 Harbin Xinguang Optic-Electronics Technology Co.Ltd(688011) （-7.18%）。
Views and investment suggestions this week
In the first three quarters of 2021, the financial performance of the military industry was excellent, and the high outlook of the industry was verified. Affected by the high base performance in the fourth quarter of 2020, it is expected that the year-on-year growth rate of performance in the fourth quarter of 2021 is expected to slow down. However, with the release of production capacity and strong demand for military products, the high outlook of the industry is expected to continue.
Looking forward to 2022, the counter cyclical nature 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 that “military equipment has been accelerated since the end of the 13th five year plan, and the inflection point of sector performance has been upward and continuously released at a high speed” continues to be fully verified, which means that the military sector is expected to continue to receive financial attention, the market funds are active, and it is appropriate to tap individual stocks 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.
