Core view
Science and technology is the first attribute of military industry. Military investment should focus on the present and the future. Under the current wave of national defense construction, many high-quality national defense supporting enterprises have come to the fore. However, we believe that while paying attention to financial data and tracking order production capacity, we should also appropriately jump out of the framework of prosperity investment, find some companies with strong core technology and committed to the application and promotion of new technologies, new materials and new products, which are expected to promote iteration from the supply side, In the future, a certain field of China’s high-end manufacturing industry will become a mainstay of high-quality enterprises. The high-performance products, the improvement of production efficiency and even disruptive innovation brought by the industrialization of cutting-edge technology are the commanding heights of the game of great powers in the future. The particularity of the military industry naturally makes it the first round of industrialization of many cutting-edge technologies. The United States mentioned in its national defense strategy that it should “realize the qualitative change of military construction with the application of high and new technology, so as to obtain intergenerational advantages with its opponents”. Therefore, although the investment in cutting-edge technology naturally has the attribute of military industry, its future growth space is by no means limited to a single military industry.
Strengthening research on cutting-edge technologies and promoting the repricing of corresponding companies is an important context for military investment to look to the future. Considering the long cycle of equipment research and development and the highly integrated characteristics of cutting-edge technology, China’s military industry has developed to this stage. In the future, we should keep up with the iterative direction of advanced technology, or even achieve anti transcendence. We should tilt more resources forward along the technical field. When it comes to investment, the output value of the company or business with this endowment is often not too large, but the small base will have considerable growth space once the demand is released and the batch is ushered in. At the same time, this kind of hard technology naturally has high barriers to entry. Therefore, in the state of clear industrial trend, it is likely to have greater room for valuation promotion.
Overseas aerospace manufacturing giants have clearly increased their equity investment in recent years. Boeing established horizon x, a venture capital company, in April 2017, which is responsible for Boeing’s exploration of new technologies and Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) . Within three years of its establishment, horizon X has invested nearly $1 billion in more than 30 companies. Airbus group established Airbus ventures in May 2015 with an initial investment of US $150 million, which is responsible for investing in “disruptive innovation” technologies worldwide. Loma established a venture capital fund as early as 2007, and further increased the size of the fund from US $100 million to US $200 million in 2018. Since 2016, Loma venture capital fund has invested US $40 million in eight companies. The main investment fields of these companies include hypersonic, advanced materials, additive manufacturing, augmented / virtual reality, artificial intelligence, autonomous systems, space technology, new energy, UAV, etc. In addition, overseas aviation giants such as GE, RR and CFM have also significantly accelerated the application of ceramic based composites in recent years.
Investment proposal and investment object
It is recommended to focus on companies with core technologies in commercial aerospace, UAV, hypersonic, electromagnetic technology, 3D printing, ceramic based composites, superconducting materials, advanced coatings, digital twins and other fields and broad growth space for military civilian integration, such as Gaona Aero Material Co.Ltd(300034) ( Gaona Aero Material Co.Ltd(300034) , buy), Weihai Guangwei Composites Co.Ltd(300699) ( Weihai Guangwei Composites Co.Ltd(300699) , buy), Fujian Torch Electron Technology Co.Ltd(603678) ( Fujian Torch Electron Technology Co.Ltd(603678) , not rated), Xinguang Optoelectronics ( Harbin Xinguang Optic-Electronics Technology Co.Ltd(688011) , buy) Chujiang Xincai ( Anhui Truchum Advanced Materials And Technology Co.Ltd(002171) , bought), Philips ( Hubei Feilihua Quartz Glass Co.Ltd(300395) , bought), Xi’An Bright Laser Technologies Co.Ltd(688333) ( Xi’An Bright Laser Technologies Co.Ltd(688333) , not rated), Aerospace Ch Uav Co.Ltd(002389) ( Aerospace Ch Uav Co.Ltd(002389) , not rated), Chengdu Jouav Automation Tech Co.Ltd(688070) ( Chengdu Jouav Automation Tech Co.Ltd(688070) , not rated), Western Superconducting Technologies Co.Ltd(688122) ( Western Superconducting Technologies Co.Ltd(688122) , not rated), Xiangtan Electric Manufacturing Co.Ltd(600416) . ( Xiangtan Electric Manufacturing Co.Ltd(600416) , not rated), Jianxi Lianchuang Opto-Electronic Science&Technology Co.Ltd(600363) ( Jianxi Lianchuang Opto-Electronic Science&Technology Co.Ltd(600363) , not rated), Nancal Technology Co.Ltd(603859) ( Nancal Technology Co.Ltd(603859) , not rated), Kyland Technology Co.Ltd(300353) ( Kyland Technology Co.Ltd(300353) , not rated) Huaqin Technology (688281, not rated), etc.
Risk tips
Industrialization is not as expected; The demand is less than expected; Technological development did not meet expectations
