Analysis of the overall situation of the industry
The growth of national defense budget brings development opportunities in the missile field: the growth rate of China’s national defense budget expenditure has increased from 6.0% in 2018 to 7.1% in 2022, with an obvious growth trend. Due to the increasingly prominent instability and uncertainty faced by international security and the increasing demand for iterative upgrading of China’s equipment, we expect the growth rate of national defense budget to continue to maintain the current trend during the 14th Five Year Plan period.
The advance receipts and contractual liabilities of listed companies related to the missile field increased significantly, which verified the market prosperity: in the first three quarters of 2021, the advance receipts and contractual liabilities of listed companies related to the missile field increased significantly, with a total of 14.382 billion yuan, a significant increase of 272.55% compared with 3.860 billion yuan in the same period of last year, indicating that the industry entered a high boom stage during the 14th Five Year Plan period.
Catalyzing the delivery of new orders and stock orders: in 2021, the announced amount of contracts disclosed by listed companies related to the missile field reached 7.228 billion yuan (excluding the announced amount of non missile related business), an increase of 35.82% over the same period of the previous year; Due to the increase of national defense budget and the urgent demand for weapon upgrading, we expect the growth rate of relevant orders in the industry to continue to maintain this growth rate during the 14th Five Year Plan period. In the first half of 2021, listed companies had a strong correlation with missiles, and their business revenue was 6.474 billion yuan, an increase of 16.77% over the same period of last year. The growth rate of operating revenue is less than that of the amount disclosed in the contract announcement, indicating that the contract signed in 2021 has not been fully released.
Industry outlook or investment highlights
In terms of airborne missiles, with the rapid mass production of fighter aircraft, the supporting airborne missiles will also be in large quantities; In terms of land-based missiles, the model change provides effective support for the large-scale production of land-based missiles; In terms of Shipborne missiles, the launching of large missile destroyers provides the basis for the development of shipborne missile type spectrum.
Investment advice
We are optimistic about the future development of the missile field and give a rating of “stronger than the market”. Companies that we are concerned about and recommend include: Chengdu Rml Technology Co.Ltd(301050) 35.
Risk tips
Systemic risk, equipment loading is less than expected, industry demand is less than expected, national defense budget is less than expected, and order delivery is less than expected.
