Market review: as of March 4, 2022, Shenwan defense and military industry fell by 2.35% this week, 0.66% lower than the Shanghai and Shenzhen 300 index, ranking 26th among Shenwan 31 industries; Shenwan defense and military industry fell 3.27% this month, losing 1.41 percentage points to the Shanghai and Shenzhen 300 index, ranking 28th among Shenwan 31 industries; Shenwan defense and military industry sector has fallen 16.30% year to date, 7.31 percentage points lower than Shanghai and Shenzhen 300 index, ranking 31st among Shenwan 31 industries.
As of March 4, 2022, the overall performance of Shenwan national defense industry was poor this week. From the performance of the last week, the navigation equipment sector had the least decline, at – 1.33%. The performance of other sectors is as follows: the military electronics sector fell 2.06%, the aviation equipment sector fell 2.72%, the ground military equipment sector fell 2.91%, and the aerospace equipment sector fell 3.11%.
Zhou’s view of the defense industry: in 2022, China’s military budget this year will be 1.45 trillion yuan, an increase of 7.1% year-on-year, an increase of 0.3 percentage points over last year, and the increase of military budget will exceed 7%; Previously, driven by the Russian Ukrainian war, Germany, Japan and other countries also mentioned the need to further increase national defense spending. It is expected that in the future, with the continuous increase of the uncertainty of global geopolitical events, all countries will improve their military strength, and a new round of arms race may have begun. There is still a mismatch between China’s current international status and its national security strategy. There is still room for the national defense budget to move closer to the economy. There is broad growth space for the subsequent upgrading and R & D of national defense equipment.
Optimistic about the high prosperity of the industry under the demand for equipment upgrading during the 14th Five Year Plan period; From the perspective of usage, with the increase of actual training times, the loss of trainer aircraft and the replenishment of missile inventory are increased. We are optimistic about the aviation industry chain and the missile industry chain with high consumables. On the other hand, we are optimistic about the transfer and transformation of aerospace technology achievements to economy and society, the development of Beidou industrial chain under aerospace industry services and the Internet of things, and the development of special chips under the new round of digital currency reform. Target suggestions and concerns: Aerospace Ch Uav Co.Ltd(002389) ( Aerospace Ch Uav Co.Ltd(002389) ), Aecc Aviation Power Co Ltd(600893) ( Aecc Aviation Power Co Ltd(600893) ), Xi’An Triangle Defense Co.Ltd(300775) ( Xi’An Triangle Defense Co.Ltd(300775) ), Avic Heavy Machinery Co.Ltd(600765) ( Avic Heavy Machinery Co.Ltd(600765) ), Unigroup Guoxin Microelectronics Co.Ltd(002049) ( Unigroup Guoxin Microelectronics Co.Ltd(002049) ), China Zhenhua (Group) Science & Technology Co.Ltd(000733) ( China Zhenhua (Group) Science & Technology Co.Ltd(000733) ), Western Superconducting Technologies Co.Ltd(688122) ( Western Superconducting Technologies Co.Ltd(688122) ), etc.
Risk warning: the number of new orders of the main engine factory is less than expected; The performance of military enterprises exceeded expectations and decreased; The risk of war between Russia and Ukraine.
