Market performance: this week, the Shanghai Composite Index rose or fell by – 0.76%, the gem index rose or fell by – 2.80%, and the CSI military industry rose or fell by + 0.20%. CITIC defense industry index rose or fell by + 0.53% this week, ranking 7 / 30; This week, the Shenwan defense industry index rose or fell by + 0.20%, ranking 10 / 31.
Since the beginning of the year, the Shanghai Composite Index has increased or decreased by – 7.03%, the gem index has increased or decreased by – 20.61%, and the CSI military industry has increased or decreased by – 21.67%. CITIC defense industry index rose or fell by – 22.10%, ranking 29 / 30; Shenwan defense industry index rose or fell by – 21.80%, ranking 30 / 31.
Sector Valuation: at present, the pe-ttm of CITIC defense and military industry index is 61.35, which is at the quantile of 18.26% in the past five years. The pe-ttm of Shenwan national defense industry index is 56.59, which is in the 12.99% quantile of the past five years. The safety margin of the military industry sector is obvious.
Latest industry perspectives:
Since the beginning of the year, the marginal valuation of military industry has been close to the bottom, with an obvious decline since the beginning of the year. Recently, gradually disclose the performance of 2021 to verify the high outlook of the military industry; In recent years, the equity incentive of military enterprises has been continuously implemented, which has mobilized the enthusiasm of senior managers and employees of the company, further guaranteed the company’s performance and endogenous growth of military enterprises; Military enterprises continue to increase and expand production, which reflects the confidence of military enterprises in future order growth and highlights the strong certainty of the industry. Therefore, we firmly believe that the military industry sector has high prosperity and strong certainty, and has good investment value at present.
With the increase of the relative and absolute value of military expenditure, the orders of main engine manufacturers are expected to continue to be signed. It is suggested to pay attention to such core barrier main engine manufacturers as [ Avic Shenyang Aircraft Company Limited(600760) ] [ Avic Xi’An Aircraft Industry Group Company Ltd(000768) ].
The release of production capacity is expected to stimulate the prosperity of upstream industries. The aeroengine industry chain is one of the best quality tracks in the military industry sector and has good elasticity in the long run. As raw materials rise under the rising pressure of raw materials, in the first quarter, due to the rising pressure of raw materials, upstream raw material vendors like [ Fushun Special Steel Co.Ltd(600399) thechain is still a high-quality track with long slope and thick snow, so we continue to be optimistic about the development potential of the track in the later stage, It is suggested to pay attention to [ Avic Heavy Machinery Co.Ltd(600765) ] [ Wuxi Paike New Materials Technology Co.Ltd(605123) ] [ Xi’An Triangle Defense Co.Ltd(300775) ] [ Guizhou Aviation Technical Development Co.Ltd(688239) ].
Of course, there are new targets related to national defense informatization, which are replaced by the localization of existing equipment, and the proportion of informatization is gradually increasing. The track is not easily affected by the rise and fluctuation of raw material prices, and there is still good growth certainty at the current time point. We suggest paying attention to the relevant targets [ Unigroup Guoxin Microelectronics Co.Ltd(002049) ], [ China Zhenhua (Group) Science & Technology Co.Ltd(000733) ], etc.
Risk warning: the release and delivery of military orders are not as expected; Performance growth is less than expected; The reform of state-owned enterprises did not advance as expected.
