Core ideas of this week
1) the chairman of the Central Military Commission Xi Jinping signed an order to issue the Interim Provisions on the supervision and administration of military equipment procurement contracts. The chairman of the Central Military Commission Xi Jinping recently signed an order to issue the “Interim Provisions on the supervision and administration of military equipment procurement contracts”, which will come into force on March 20, 2022. The regulations adhere to the guidance of Xi Jinping socialism with Chinese characteristics in the new era, thoroughly implement Xi Jinping strengthening the army, thoroughly implement the military strategic policy in the new era, follow the law of socialist market economy and the law of military equipment construction, scientifically standardize the basic tasks, basic contents and basic management system of equipment procurement contract supervision and management under the new situation and new system, and improve the quality and efficiency of equipment procurement. The “Regulations” has 6 chapters and 35 articles, and defines the management system for the supervision and management of equipment procurement contracts in accordance with the general principle of “the CMC is in charge of the general department, the theater is in charge of the main war, and the services are in charge of the construction”; Strengthen supervision according to law, optimize and improve the systems and mechanisms such as supervision and management tasks, supervision and management agreements and supervision and management plans, and improve the effectiveness of the supervision and management of equipment procurement contracts; Adhere to quality first, comprehensively and systematically design the contents, processes and requirements of equipment procurement contract supervision and management, so as to ensure the delivery of qualified equipment to the army; Innovate the supervision and management mode, and adopt the combination of pre prevention, in-process management and post evaluation to promote the innovative development of equipment procurement contract supervision and management. The military equipment procurement process is expected to be continuously optimized under this provision, or the military order procurement mode will be further improved and more vitality will be injected into the military industry chain.
2) when the USS Johnson sailed across the Taiwan Strait, the spokesman of the eastern theater responded. On March 17, the US “Johnson” missile destroyer sailed through the Taiwan Strait and publicly hyped it. Senior Colonel Shi Yi, spokesman of the eastern theater, said that the eastern theater of the Chinese people’s Liberation Army organized troops to follow, monitor and guard the whole process of the passage of US ships. Such provocative acts of the US side send a wrong signal to the “Taiwan independence” forces, which is very dangerous. The theater troops are on high alert at all times and resolutely safeguard national sovereignty and security and regional peace and stability. The “Ralph Johnson” destroyer (ddg114) began service in March 2018. It is the 64th “Arley Burke” class destroyer built by the US Navy. Equipped with the “Aegis” baseline 9 combat system, it has integrated air defense and anti missile combat capabilities and belongs to the US The Pacific Securities Co.Ltd(601099) fleet. In October last year, the Johnson arrived in Yokosuka, Japan, and entered the new home port in Japan. Previously, on February 26, the ship also sailed the Taiwan Strait, and the eastern theater made a solemn response. During the 14th Five Year Plan period, the whole army accelerated the modernization of weapons and equipment, resolutely thwarted all interference by external forces and separatist acts of “Taiwan independence”, continued release of relevant needs, and the military industry chain may continue to benefit. first
Focus on aviation, aerospace, informatization and new materials:
1) aviation equipment: both the surrounding situation and the construction of 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 that attention should be paid to the following: [ ” Avic Shenyang Aircraft Company Limited(600760) 123 ], [ 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 focus on 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) ], [ Beijing Relpow Technology Co.Ltd(300593) ]. In terms of Satellite Internet, Beidou navigation: the year-on-year growth rate of Beidou satellite navigation industrial chain began to increase in 2021, and it is expected to maintain a high growth rate in 2022 and 2023. In Beidou navigation industrial chain, the demand for Beidou navigation chips and Beidou navigation terminals increased rapidly; In the field of Satellite Internet: 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 its infancy, Satellite Internet will still become an important development direction of 6G mobile communication. Suggested attention: [ Chengdu Corpro Technology Co.Ltd(300101) ], [ Chengdu M&S Electronics Technology Co.Ltd(688311) ].
4) informatization sector: due to factors such as the localization process, military modernization and accelerated renewal of new models, it has continued to exceed 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 achieved independent control and represents China’s leading level, and the dual / multi flow system of model certification makes the suppliers limited, and the competition pattern on the supply side is good. On the demand side, due to the large volume of main battle models and supporting engines, the increasing proportion of new material applications, the increasing outsourcing proportion of main engine manufacturers, domestic substitution and other factors, it is expected that the future growth of the industry will be highly certain, Moreover, after the demand increases, the scale effect will continue to appear, driving the continuous decline of unit cost. Therefore, the gross profit margin of the industry may still have room to improve and gradually realize the profit, and has the possibility of urgent development to 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.
