Key investment points
Listed companies of military central enterprises are expected to achieve a “good start” in the first quarter
1) more than 20 member units of the aviation industry, including Xi’an Airlines / Shaanxi airlines, Shenyang airlines, Hongdu, Changfei / Hafei, anda / Jinghang, thoroughly implemented the spirit of the two sessions, focused on the main responsibility and main business, carefully organized scientific research and production, and strive to achieve a “good start” in the first quarter. (March 16th aviation industry WeChat official account)
2) Liu he presided over the meeting of the Finance Committee of the State Council to study the current situation and mentioned “implementing the decision-making and deployment of the Party Central Committee and earnestly invigorating the economy in the first quarter” from a larger level. (Xinhua news agency, March 16)
3) at the first morning survey meeting in 2022, the chairman stressed: “think about the whole year, focus on the first quarter, strive to make a good start and ensure that all indicators achieve a good start in the first quarter”. (January 5 Inner Mongolia First Machinery Group Corporation Co.Ltd(600967) Group official website)
12 word core logic of military industry: “endogenous extension, domestic demand, foreign trade, military and civilian products”
1) endogenous: under the “century changing situation”, the national defense and military industry has a high growth certainty, “preparing for war / 2027 / building a strong national defense commensurate with the second largest economy” is the established direction, and the large contract liabilities in 2021 highlight the high boom of the 14th five year plan. Under the catalysis of “scale effect / equity incentive / small core and large cooperation / pricing reform / large order + large prepayment”, the operation efficiency of military enterprises is also expected to be improved
2) extension: in the next few years, the securitization of national defense and military industrial assets and the reorganization and listing of core military products are expected to set off a new round of climax, and pay attention to the reorganization process of China Shipbuilding Group / Aerospace Hi-Tech Holding Group Co.Ltd(000901) / CETC / AVIC / Aerospace Science and Industry / ordnance industry.
3) foreign trade: China’s fighter / UAV / Trainer / tank are globally competitive. Recently, there have been frequent good news in the field of military trade. The first export of J-10 CE fighter, the establishment of fc-31 stealth fighter, and the foreign party announced the order of L15 higher education aircraft. China’s military trade market is expected to further open against the background of the subsequent global turmoil, the increase of national defense investment and the possible decline of Russia’s export capacity under Western sanctions.
4) civil products: the conflict between Russia and Ukraine highlights the importance of independent control in important fields. In the future, while national defense and military industrial enterprises are based on the main business of military products, relevant civil products (such as civil aviation large aircraft, civil aviation engines, new energy vehicle connectors, diamond cultivation and other fields) also need to be paid attention to.
At the present stage, the value of the military industry sector is prominent, and we are optimistic about the missile / information technology / Aviation Development / military aircraft sub industry,
1) since the beginning of the year, Shenwan defense industry index has fallen by 22% in total. At present, the overall PE is 56 times, which is 19% of the historical high. Driven by the two wheels of “high deterministic growth + epitaxial growth”, there is no doubt that the industry fundamentals are booming, and the configuration value is prominent at the current stage.
2) host plants: scale effect + fine management, small core and big collaboration. In the next five years, the performance of the host plants will be resilient, and the superposition of “three years of action for SOE reform” ends. It’s suggested to focus attention on the endogenous growth of the company and the end of the “three years of action for state enterprise reform”. It’s suggested to pay attention to what’s expected to benefit from the coupling resonance of the coupling between corporate growth and state enterprise reform. Related targets that are expected to benefit under the resonance of the coupling resonance between the coupling resonance of the coupling resonance of the coupling of the coupling resonance between corporate growth and state enterprise reform. Relevant targets that are likely to benefit. Relevant targets that are likely to benefit. Relevant targets that are likely to benefit. Relevant targets that are likely to benefit. Related targets such as: 00076 Avic Xi’An Aircraft Industry Group Company Ltd(000768) \ etc.
3) raw materials and core sets: look at high barriers / high scarcity / competitive landscape. Good competition pattern: high barriers / high scarcity / high barriers to high barriers / high scarcity / high competition pattern. High-temperature alloys / composites / composite materials / component level matching / engine forging / engine casting. Etc. subdivision tracks: ‘ Fushun Special Steel Co.Ltd(600399) \ \35 assemblylevel level matching / component level matching / engine forging castings and engine forging casting. Etc. subdivision. Subdivision of the subdivision of the subdivision of the subdivision of the circuit. Subdivision of the subdivision of the circuit. Subdivision of, Beijing Beimo High-Tech Frictional Material Co.Ltd(002985) , Avic Heavy Machinery Co.Ltd(600765) , Chengdu Leejun Industrial Co.Ltd(002651) , Wuxi Paike New Materials Technology Co.Ltd(605123) , Guizhou Aviation Technical Development Co.Ltd(688239) , Wuxi Hyatech Co.Ltd(688510) , Anhui Yingliu Electromechanical Co.Ltd(603308) , Jiangsu Toland Alloy Co.Ltd(300855) Xi’An Bright Laser Technologies Co.Ltd(688333) etc.
4) missile and informatization: Unigroup Guoxin Microelectronics Co.Ltd(002049) , Hubei Feilihua Quartz Glass Co.Ltd(300395) , Fujian Torch Electron Technology Co.Ltd(603678) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Chengdu Zhimingda Electronics Co.Ltd(688636) , Wuhan Guide Infrared Co.Ltd(002414) , Zhejiang Dali Technology Co.Ltd(002214) , China Marine Information Electronics Company Limited(600764) .
Risk tips: 1) the rhythm of equity incentive and asset securitization is lower than expected; 2) the delivery progress of important products is lower than expected.
