The core manufacturer of aviation forgings Avic Heavy Machinery Co.Ltd(600765) , Guizhou Aviation Technical Development Co.Ltd(688239) , Wuxi Paike New Materials Technology Co.Ltd(605123) has released its 2021 annual report, and its performance has achieved rapid growth, which is consistent with the strong demand of the downstream Avic Heavy Machinery Co.Ltd(600765) , Guizhou Aviation Technical Development Co.Ltd(688239) , Wuxi Paike New Materials Technology Co.Ltd(605123) Aerospace forging business achieved revenue of 5.73 billion yuan, 820 million yuan and 720 million yuan respectively, with year-on-year growth of 37%, 39% and 118% respectively; The gross profit margin was 28.9%, 32.4% and 46.2% respectively, with a year-on-year increase of 0.9, 2.4 and 3.9 percentage points respectively. The military + civil market has been gradually opened, the technical and market barriers in the field of aviation forgings are deep, and the profitability has been steadily improved under the large-scale effect. It is optimistic about the growth space of aviation forging enterprises.
The NATO summit issued a joint statement and decided to increase aid to Ukraine, military deployment and military spending of Member States. On March 24 local time, the NATO summit was held at the NATO headquarters in Brussels, Belgium. After the meeting, the joint statement of heads of state and government of NATO member states was issued, which made decisions in three aspects. First, continue to provide military assistance to Ukraine; Second, strengthen the military deployment of NATO forces along the Baltic Sea, Eastern Europe and the Balkans; Third, NATO member states agree to increase military spending, which will make their military spending reach or close to the standard of 2% of China’s GDP. Germany, Belgium and other countries have announced an increase in military spending before the meeting. The conflict between Russia and Ukraine may accelerate a new round of global military expenditure. Under the influence of the epidemic, the economic growth slows down, and the defense and military expenditure shows obvious countercyclical characteristics.
The boom expansion of the industrial chain is conducted in an orderly manner, and the value of sector stabilization and allocation is highlighted. Under the influence of market sentiment and other factors, the military industry sector experienced a sharp correction at the beginning of the year, and the logic of long-term boom expansion remained unchanged. The verification of advances received by downstream enterprises and the landing of large orders will be conducted in an orderly manner to the upstream and midstream along the industrial chain. During the “14th five year plan” period, the demand of supporting enterprises is large-scale and uncertain, and the performance of private leaders will be more flexible. The CSI military industry index is valued at 58 times, which is at the 16% quantile value of historical PE. It continues to be optimistic about the value of sector allocation under the current position.
Grasp the main line of aviation equipment investment, and military electronics has high independent and controllable growth. 1) The contract liabilities of the main engine factory + the verification of the advance payment, and the growth of the aviation industry chain will continue to be realized. From certainty to efficiency, from engine body and components to the whole industry chain, and then to the whole system. The main engine manufacturer pays attention to Avic Shenyang Aircraft Company Limited(600760) , Avic Xi’An Aircraft Industry Group Company Ltd(000768) , Jiangxi Hongdu Aviation Industry Co.Ltd(600316) , Avicopter Plc(600038) , Aecc Aviation Power Co Ltd(600893) ; The body system pays attention to Avic Electromechanical Systems Co.Ltd(002013) , China Avionics Systems Co.Ltd(600372) , Aecc Aero-Engine Control Co.Ltd(000738) , Beijing Beimo High-Tech Frictional Material Co.Ltd(002985) ; Attention to aviation forgings and parts Avic Heavy Machinery Co.Ltd(600765) , Wuxi Paike New Materials Technology Co.Ltd(605123) , Guizhou Aviation Technical Development Co.Ltd(688239) , Xi’An Triangle Defense Co.Ltd(300775) , Chengdu Ald Aviation Manufacturing Corporation(300696) ; Attention to metal materials Fushun Special Steel Co.Ltd(600399) , Western Superconducting Technologies Co.Ltd(688122) , Baoji Titanium Industry Co.Ltd(600456) , Gaona Aero Material Co.Ltd(300034) , Jiangsu Toland Alloy Co.Ltd(300855) ; Composite materials focus on Avic Aviation High-Technology Co.Ltd(600862) , Weihai Guangwei Composites Co.Ltd(300699) , Sinofibers Technology Co.Ltd(300777) . 2) The certainty of missile weapons and equipment benefits from practical military training, and the independent and controllable military electronics in the field of high-end equipment brings high growth. Pay attention to Beijing Yuanliu Hongyuan Electronic Technology Co.Ltd(603267) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Avic Jonhon Optronic Technology Co.Ltd(002179) , Guizhou Space Appliance Co.Ltd(002025) , Chengdu Rml Technology Co.Ltd(301050) , etc.
Risk tip: the epidemic repeatedly affects the macroeconomic environment; Equipment R & D progress and procurement progress are less than expected; Military procurement prices fell; Industry competition intensifies.
