Market review: as of December 31, 2021, Shenwan defense industry rose 4.53% this week, outperforming the Shanghai and Shenzhen 300 index by 4.14 percentage points, ranking second among Shenwan 31 industries; Shenwan’s defense and military industry fell 1.01% this month, 3.25 percentage points lower than the Shanghai and Shenzhen 300 index, ranking 27th among Shenwan’s 31 industries; Shenwan defense and military industry sector has risen 11.17% year to date, outperforming the Shanghai and Shenzhen 300 index by 16.37 percentage points and ranking 15th among Shenwan 31 industries.
As of December 31, 2021, the five sub sectors of Shenwan national defense industry performed well. From the performance of the recent week, the aerospace equipment sector increased the most, at 7.78%. The performance of other sectors is as follows: the aviation equipment sector rose 5.70%, the ground military equipment sector fell 3.57%, the navigation equipment sector fell 2.76%, and the military electronics sector rose 3.38%.
View of Defense Industry Week: multiple positive factors push the industry to a new height: (1) several main engine manufacturers under AVIC group announced that they had completed the annual plan ahead of schedule, and some enterprises exceeded their tasks. It is expected that the overall performance growth of the industry is expected to reach a higher level after the capacity expansion of some middle and upstream enterprises is completed in 2022; (2) The announcement of the landing of large orders between China and foreign countries has gradually won foreign recognition for China’s export of weapons and equipment. It is expected that overseas orders will continue to increase in the future. Under the resonance of domestic and foreign demand, the high prosperity of the industry is expected to be fully released in 2022 and the judgment of maintaining the high prosperity of the industry will remain unchanged. (3) The reform of state-owned enterprises has been accelerating; Many enterprises announced equity incentive schemes, which are conducive to the long-term development of military enterprises and improve production efficiency.
In the long run, geopolitical events are becoming more and more complicated, and the number of global military exercises is becoming more and more frequent. Only by improving our military strength can we better deal with the increasingly complex world situation; The new variant virus has increased global uncertainty. As a key counter cyclical plate, the military industry plate is less affected by global economic events, and the industry as a whole is better and more certain. 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, and 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 development of Beidou industrial chain under the Internet of things and the development of special chips under the new round of digital currency reform. Suggestions on the subject: Aecc Aviation Power Co Ltd(600893) (600893), Avic Shenyang Aircraft Company Limited(600760) (600760), Unigroup Guoxin Microelectronics Co.Ltd(002049) (002049), Fushun Special Steel Co.Ltd(600399) (600399), Western Superconducting Technologies Co.Ltd(688122) (688122), Gaona Aero Material Co.Ltd(300034) (300034), Avic Electromechanical Systems Co.Ltd(002013) (002013), Avic Heavy Machinery Co.Ltd(600765) (600765), etc.
Risk warning: the number of new orders in the main engine plant is less than expected; Enterprise reform is not as expected; The epidemic worsened more than expected.
