China’s military budget in 2022 was 1.45 trillion yuan, a year-on-year increase of 7.1%, an increase of 0.3 percentage points over 2021, the first increase of more than 7% since 2019. In recent years, the growth of China’s military spending has basically kept pace with the growth of GDP. According to the GDP growth target of about 5.5% in 2022, the proportion of military expenditure in GDP is about 1.2%, which is still far from the world mainstream level of 2.4%.
China Securities Co.Ltd(601066) Securities believes that the sustained and stable increase of national defense budget is in line with the growth of national defense demand. Looking forward to the 14th five year plan, it is expected that the growth rate of national defense expenditure will continue to maintain a stable growth of about 7% compound growth rate. The upgrading of new generation equipment + comprehensively strengthened practical training will greatly increase the procurement and maintenance needs of weapons and equipment. It is expected that the growth rate of equipment cost during the 14th Five Year Plan period may be higher than the overall growth rate, reaching a compound growth rate of 10% – 15%. At present, the military industry is spreading from local prosperity to overall prosperity. The “14th five year plan” is expected to experience two rounds of capacity expansion. It is optimistic about the whole military industry chain in 2022.
According to the theme database of financial Associated Press, among the relevant listed companies:
Fushun Special Steel Co.Ltd(600399) is a large-scale key enterprise of special steel and R & D and production base of military materials, providing a large number of key new special steel materials for a number of national key national defense projects.
Chengdu Ald Aviation Manufacturing Corporation(300696) has a variety of special processes such as nondestructive testing, anodizing, painting, chromium plating, cadmium plating and nickel plating, and the whole process capacity of aviation parts is completed.
