Key investment points
1. Market review this week
This week, the Shenwan national defense industry index rose 4.53%, the Shanghai Composite Index rose 0.60%, the gem index rose 0.78%, the Shanghai and Shenzhen 300 index rose 0.39%, and the national defense industry sector ranked second among the 28 Shenwan level industries. The PE (TTM) of Shenwan national defense and military industry sector is 69.76 times, the aerospace equipment in each sub sector is 76.75 times, the aviation equipment is 78.65 times, the ground military equipment is 59.56 times, and the shipbuilding is 98.58 times.
2. The three-year action of state-owned enterprise reform is coming to an end, and the reform dividend is expected to be released faster
The sector continued to rise this week. At present, the PE (TTM) quantile of Shenwan national defense industry index in the past decade is 56.45%, which is in the middle of history. This round of military industry market is supported by fundamentals, with high growth certainty. The plate valuation has entered the upper repair channel, and there is still a large repair space. 2022 is the last year of the three-year reform action of state-owned enterprises, and the reform dividend is expected to be released faster. Military industry is the key area of this round of state-owned enterprise reform. With the deepening of the reform of system, policy and mechanism, the mixed reform of military state-owned enterprises is expected to speed up, and the industry fundamentals are expected to accelerate.
3. The aerospace industry has made remarkable achievements throughout the year, and the industry is expected to continue its high prosperity
At 0:43 on December 30, the long march 3B carrier rocket successfully put the communication technology test satellite No. 9 into the predetermined orbit. So far, the aerospace science and industry’s Aerospace Launch mission in 2021 has come to a successful conclusion. According to statistics, 144 space launches were carried out worldwide in 2021, of which China carried out 55 launches, ranking first in the world and setting a new record for the number of launches. China’s aerospace achievements in 2021 are remarkable. The launch of the core module of the space station and the tianwen-1 landing satellite are the most concerned annual Aerospace missions. On April 29, the long march 5B rocket carrying the space station “Tianhe core module” was successfully launched. As the largest spacecraft in human history, the space station represents the most comprehensive, complex, advanced and comprehensive scientific and technological achievements in today’s aerospace field, and is an important embodiment of a country’s aerospace strength. On May 15, tianwen-1 broke through key technologies such as speed launch of the second universe, interplanetary flight, TT & C communication and soft landing of extraterrestrial planets, realizing China’s first extraterrestrial planet landing. On December 10, the long march series launch vehicles ushered in the 400th launch. The first three “100 times” took more than 37 years, 7.5 years and 4 years respectively, and the latest “100 times” took only 2 years and 9 months. China’s aerospace industry has developed rapidly in recent years and now ranks first in the world. Wu Weiren, academician of the Chinese Academy of engineering, once said that China will fully build itself into an aerospace power by 2050, and China’s aerospace industry will gradually achieve a global leading level. The revenue growth of the aerospace equipment sector from 2021q1 to 2021q3 was 47.41%, 19.05% and 25.83% respectively, and the growth of net profit attributable to the parent company was 285.72%, 106.24% and 64.01% respectively. With the continuous construction of aerospace power, the performance of the sector is expected to continue to grow high.
4. Key recommendations this week
1) The targets of military electronic components with low valuation and high performance flexibility are recommended: China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Zhuzhou Hongda Electronics Corp.Ltd(300726) , Beijing Yuanliu Hongyuan Electronic Technology Co.Ltd(603267) .
2) Focus on the midstream aviation manufacturing targets with gradual scale effect and significant improvement of comprehensive supporting capacity: Avic Heavy Machinery Co.Ltd(600765) , Chengdu Ald Aviation Manufacturing Corporation(300696) , Chengdu Haoneng Technology Co.Ltd(603809) , Anhui Yingliu Electromechanical Co.Ltd(603308) .
3) Focus on recommending the overall and key systems of weapons and equipment with monopoly and scarcity and huge long-term growth space: Avic Shenyang Aircraft Company Limited(600760) , Aecc Aviation Power Co Ltd(600893) , Avicopter Plc(600038) , Aecc Aero-Engine Control Co.Ltd(000738) and Wuhan Guide Infrared Co.Ltd(002414) .
4) It is suggested to pay attention to the beneficiary objects of the mixed reform of state-owned enterprises: Chengdu Spaceon Electronics Co.Ltd(002935) , Aerospace Ch Uav Co.Ltd(002389) , Avic Xi’An Aircraft Industry Group Company Ltd(000768) , Avicopter Plc(600038) , Guizhou Space Appliance Co.Ltd(002025) and Sun Create Electronics Co.Ltd(600990) .
Risk warning: the release and delivery of military orders are not as expected; Performance growth is less than expected; The reform of state-owned enterprises did not advance as expected.
