Core ideas of this week
1) In response to the US “national defense authorization act of 2022”, the Ministry of defense accused it of poisoning the relations between the two armed forces of China and the United States. At a regular press conference on December 30, senior colonel Tan Kefei, spokesman of the Ministry of national defense, responded to the US president’s signing of the “national defense authorization act of 2022”, saying that the act was full of cold war thinking and ideological prejudice, played up the “China Threat Theory”, tried to discredit China’s national defense policy and military development, and made unwarranted accusations against China on issues such as Taiwan and Xinjiang. The bill seriously interferes in China’s political affairs, seriously damages China’s national sovereignty, security and development interests, seriously damages China US mutual trust and seriously poisons Sino US military relations. China expresses strong dissatisfaction and firm opposition to this. In addition, Tan Kefei also pointed out that China has always adhered to the path of peaceful development and defensive national defense policy. The US side’s gross interference in China’s politics, exaggerating China’s threat, discrediting China’s development and emphasizing competition with China is actually putting the relations between the two countries and the two armed forces into a dangerous situation. China urges the United States to abandon the concept of zero sum game, treat China’s national defense and military construction objectively and rationally, stop introducing hostile policies towards China, stop shaping China into an opponent or even enemy of the United States, and do more things conducive to the healthy and stable development of bilateral military relations. With the increasingly tense international situation, the military industry chain may continue to benefit from the background of military training and preparation for the 14th five year plan.
2) Liaoning warship formation has completed offshore practical training to effectively improve the combat capability of aircraft carrier formation system. According to Xinhua news agency, the Liaoning warship formation of the Navy successfully completed the sea combat training on the morning of December 30 and returned to Qingdao’s home port safely and smoothly. During the training, the formation crossed the Yellow Sea and the East China Sea and entered many sea areas in the West The Pacific Securities Co.Ltd(601099) through the gonggu Strait to carry out comprehensive exercises on multiple topics and mutually conditional confrontation training, which effectively improved the combat capability of the aircraft carrier formation system. In the West The Pacific Securities Co.Ltd(601099) , the formation has continuously moved to multiple training sea areas to test the formation’s combat capability close to the actual combat. It has repeatedly organized sub domain combat training courses such as air and submarine, and conducted continuous day and night training and tactical flight outside the island chain of Shipborne fighters, so as to further improve the combat planning, command and control, system construction, force coordination and comprehensive support capabilities, test, improve More than 10 war training achievements were optimized. During the training, foreign warships and aircraft approached and tracked and monitored our aircraft carrier formation for many times, handled the formation steadily and carefully throughout the whole process, and organized shipborne fighters to take off and respond effectively for many times, which fully demonstrated the excellent military quality of commanders at all levels and the tenacious fighting style of officers and soldiers. During the 14th Five Year Plan period, the whole army continued to strengthen modernization, attached importance to practical training, and the demand for consumption and replacement of relevant weapons and equipment continued to be released.
Focus on aviation, aerospace, informatization and new materials:
1) Aviation equipment: both the surrounding situation and the construction of the Navy and air force have put forward new requirements for military aircraft. At present, there is a large room for improvement in the number and structure of Chinese military aircraft. It is expected that with the national defense budget inclined to weapons and equipment, especially the air force and Navy, it is expected to accelerate the upgrading of military aircraft. The disclosure of large contract liabilities by many companies in the early stage may further improve the cash flow of the industrial chain and promote the production and delivery of products. We believe that aviation equipment will show a high boom during the 14th Five Year Plan period, driving the improvement of industrial chain performance. In addition, the reform of military pricing mechanism and the increase of equity incentive scheme will also promote the improvement of industry profit level. It is suggested to pay attention to: [ Avic Shenyang Aircraft Company Limited(600760) ], [ Avic Xi’An Aircraft Industry Group Company Ltd(000768) ], [ Jiangxi Hongdu Aviation Industry Co.Ltd(600316) ], [ Aecc Aviation Power Co Ltd(600893) ], [ Avic Electromechanical Systems Co.Ltd(002013) ], [ Hefei Jianghang Aircraft Equipment Co.Ltd(688586) ], [ Beijing Beimo High-Tech Frictional Material Co.Ltd(002985) ], [ Avic Jonhon Optronic Technology Co.Ltd(002179) ], [ Avic Heavy Machinery Co.Ltd(600765) ], [ Wuxi Paike New Materials Technology Co.Ltd(605123) ], [ Guizhou Aviation Technical Development Co.Ltd(688239) ], [ Chengdu Ald Aviation Manufacturing Corporation(300696) ], [ Jiangsu Maixinlin Aviation Science And Technology Corp(688685) ].
2) Aerospace equipment: in terms of missile weapons and equipment, the main driving factors of the missile industry mainly come from: the first is the iterative period, the second is the increase in the demand for strategic reserves, and the third is driven by practical training. The missile sector may be the most flexible segment during the 14th Five Year Plan period, which will bring rapid performance thickening of relevant listed companies, pay attention to the overall opportunities of the missile sector, and give priority to the targets with high performance flexibility and high proportion of missile business. It is suggested to pay attention to: [ Guizhou Space Appliance Co.Ltd(002025) ] and [ Beijing Relpow Technology Co.Ltd(300593) ]. In terms of Satellite Internet, Beidou navigation: the year-on-year growth rate of Beidou satellite navigation industry chain began to increase in 2020, and it is expected to maintain a high growth rate in 2022 and 2023. In Beidou navigation industry chain, the demand for Beidou navigation chips and Beidou navigation terminals increased rapidly; Satellite internet field: China Spacesat Co.Ltd(600118) network group is expected to become the main force of China Spacesat Co.Ltd(600118) Internet. At present, although China Spacesat Co.Ltd(600118) Internet is still in the early stage of development, Satellite Internet will still become an important development direction of 6G mobile communication. It is suggested to pay attention to: [ Chengdu Corpro Technology Co.Ltd(300101) ] and [ Chengdu M&S Electronics Technology Co.Ltd(688311) ].
4) Informatization sector: due to factors such as localization process, military modernization and accelerated update of new models, it has continued to surpass the growth of the industry since 2018, focusing on military semiconductors, upstream electronic components, radar and electronic countermeasures, communication, navigation and remote sensing and other directions. The performance of some companies has taken the lead in entering the high-speed growth stage and is expected to continue in 2022. It is suggested to pay attention to: [ China Zhenhua (Group) Science & Technology Co.Ltd(000733) ], [ Unigroup Guoxin Microelectronics Co.Ltd(002049) ], [ Chengdu Zhimingda Electronics Co.Ltd(688636) ].
5) New materials: it is suggested to focus on the direction of superalloys, titanium alloys and carbon fiber composites. The military new material technology has basically realized self-control and represents China’s leading level, and the dual / multi flow system of model certification makes the suppliers limited, the competition pattern at the supply end is good, the demand end is due to the large volume of main battle models and supporting engines, the proportion of new material application is increasing, the outsourcing proportion of main engine manufacturers is increasing, domestic substitution and other factors, It is expected that the future growth of the industry is highly uncertain, and the scale effect will continue to appear after the demand increases, driving the continuous decline of unit cost. Therefore, the gross profit margin of the industry may still have room to improve and gradually realize to profit, and it is possible to urgently explore the civil market, with good long-term growth. It is suggested to pay attention to: [ Baoji Titanium Industry Co.Ltd(600456) ], [ Gaona Aero Material Co.Ltd(300034) ], [ Western Superconducting Technologies Co.Ltd(688122) ], [ Avic Aviation High-Technology Co.Ltd(600862) ].
Risk warning: the replacement of weapons and equipment is not as expected; The development of a new missile model was not as expected.
