Main points:
Weekly gathering of scientific and technological views (Communication)
How much is the defense budget? On March 5, the Ministry of finance's report on the draft central and local budgets for 2022 showed that China's national defense budget in 2022 was 1.45 trillion yuan, an increase of 7.1% year-on-year. The growth rate of China's military expenditure in 2020 and 2021 was 6.6% and 6.8% respectively. The national defense budget in 2022 increased steadily compared with the previous two years, exceeding 7% for the first time since 2019. Overall, China's defense budget has risen moderately, and there is still room for improvement in the proportion of military spending to GDP.
How does the defense budget come from? First, the defense department should put forward military budget estimates from bottom to top; Secondly, the Ministry of Finance calculates and comprehensively balances the military budget estimates; Thirdly, the Ministry of logistics and support prepares the annual national defense budget, which will be included in the draft central budget by the Ministry of finance; Finally, as an integral part of the central budget, the national defense budget is submitted by the State Council to the National People's Congress for examination and approval in the form of a draft central budget. In short, China's defense budget is neither "let nature take its course" nor "strategic advance", but the result of the integration of national strategy and actual needs, which is a comprehensive embodiment of progress and stability.
How to spend the defense budget? According to the white paper "China's national defense in the new era", China's military expenditure used to adhere to the "333" ratio: about 30% of personnel living expenses, about 30% of training and maintenance expenses, and about 30% of equipment expenses. In recent years, the proportion of equipment cost has increased to 40% year by year. On the one hand, the number of weapons and equipment has ushered in compensatory development after the military reform. On the other hand, due to the needs of informatization and modernization of weapons and equipment, most of the cost of national defense informatization comes from equipment cost. We expect that the proportion of the cost of information construction will increase year by year in the next few years. China's military spending on national defense information construction may be close to 30 billion yuan in 2022.
The focus of national defense strategy has shifted from mechanization to informatization, and national defense informatization has ushered in development opportunities. First, China's military proposition is active defense, and we cannot simply compare the number of weapon platforms China has with the United States and Russia. Therefore, we believe that the rapid growth of the number of weapon platforms is not sustainable, and will return to on-demand and orderly development after undergoing compensatory loading; Second, modern warfare pays more attention to combat effectiveness and damage ratio. According to "electronic information equipment", the combat accuracy is doubled and the combat effectiveness is increased by 400% through information equipment, while the weapon power is doubled and the combat effectiveness is only increased by 40%. Therefore, we believe that there is an urgent need for national defense information construction in order to maximize the effectiveness of the weapon platform. Third, in the final analysis, the core of national defense informatization is technology. Private enterprises have more advantages in market mechanism, technology iteration and rapid response. The high participation of civil military enterprises will further accelerate the construction of national defense informatization, so as to burst out greater vitality.
Investment advice
National defense informatization focuses on military embedded computing and military communication. National defense informatization covers five fields: radar, satellite navigation, information security, military communication and military electronics. C4ISR is its application carrier, of which the core is C4, including command, control, communication and computer. Among them: 1) the communication short board is the most obvious, and the detection (investigation), control (charge) and Communication is needed to form a closed loop for fighting (strike) and evaluation (evaluation), so military communication is the central nerve of the whole national defense informatization. At present, all kinds of wired / wireless transmission equipment and switching networks of our army are not perfect, especially the lack of broadband wireless communication means, and the communication capacity of the last kilometer of the land battlefield is limited. 2) With the largest computing space, embedded computers are widely used in weapons and equipment of various services and arms. According to the application scenarios, they can be mainly divided into missile borne, airborne, vehicle borne and shipborne. The missile borne field is expected to maintain a growth rate of more than 50% every year, benefiting from the large volume of main battle missiles and the demand for projectile guidance; In the field of airborne, benefiting from the large volume of main combat aircraft and the increase in the value proportion of avionics system, it is expected to maintain a growth rate of about 30% every year. We estimate that the annual market space of China's military embedded computers exceeds 10 billion yuan. In addition, in the field of national defense informatization, we are also optimistic about the two main lines of domestic substitution and military training and preparation. Suggestions on military embedded computing focus on Chengdu Zhimingda Electronics Co.Ltd(688636) ; It is suggested to focus on Jushri Technologies Inc(300762) , Tianjin 712 Communication & Broadcasting Co.Ltd(603712) , Guangzhou Haige Communications Group Incorporated Company(002465) . In addition, it is suggested to pay attention to Unigroup Guoxin Microelectronics Co.Ltd(002049) , Shanghai Fudan Microelectronics Group Co.Ltd(688385) , and Piesat Information Technology Co.Ltd(688066) , Geovis Technology Co.Ltd(688568) .
Risk tips
The construction of national defense informatization was not as expected.
