The selection of the 9th choice “best analyst” in 2021 has ended, and the list of the 9th choice “best analyst” was grandly announced on January 18, 2022.
How to refine the top ten analysts? They stand at the forefront of capital market research and master the latest developments of the industry. How to grasp the investment opportunities in subdivided fields in 2022? In this China stock market news choice data dialogue, Zhang Chao, the second military chief of AVIC securities in 2021, invites you to share the thinking feast!
Congratulations on winning the title of best analyst in 2021. Thank you very much for your conversation with the editor.
ask : how do you feel about winning the 2021 best analyst award this time? What do you think is the right thing to win the prize? Where else can we do better
A: first of all, I would like to thank China stock market news for its support for our work. Backed by aviation industry group, AVIC securities has the largest military industry team in the whole market with more than 20 people. It engages in military industry research with military industry quality and serves the military industry with military industry research. Fortunately, we have caught up with the opportunities of the military industry. We will continue to cultivate the primary and secondary markets of the military industry and bring high-quality research results and services to the capital market.
ask : what impact has this had on your work? Has the number of research and roadshows decreased? What is the proportion of field research and roadshows
A: the epidemic has affected all walks of life to varying degrees, but the demand and production of the military industry remain strong. As far as our team work is concerned, the impact of the epidemic is relatively limited. The regionality of military industry is obvious. For example, Chengdu, Xi’an, Beijing and the Yangtze River Delta are the gathering places of military enterprises. A single trip will arrange enterprises upstream and downstream of the regional industrial chain, including primary and secondary companies, to conduct intensive research and facilitate cross verification. The number of roadshows has also increased. Offline roadshows are less affected by the epidemic, but online communication is more frequent.
ask : what do you think is the biggest change in the field of national defense and military industry in the past two years? Will this trend continue? What new changes do you expect in 2022
A: the military industry is in the best era in history. There are several major changes:
1. The military industry has ushered in historic development opportunities. 2021 is the opening year of the “14th five year plan”, which breaks through the development law of loosening before and tightening after the plan in the past five years. The first year is the big year, the start is the decisive battle, and the start is the sprint. The whole industry shows a high level of demand, no time to wait, and supply is in full swing. The reform mechanism of state-owned enterprises is full of endogenous vitality, and private enterprises are fully engaged in seizing historic opportunities.
2. The military industry has opened a new round of production expansion cycle. We have observed that the funds raised by the military industry in the past two years are very high, exceeding the sum of the past four years in only 21 years. The projects invested with raised funds cover from raw materials and components to subsystems to final assembly plants. It can be seen that all links of the military industry chain are actively strengthening capacity-building. The 14th five year plan is the beginning of a new round of boom cycle of military industry. Demand will drive the further improvement of supply side capacity. With the expansion of cake share and the further strengthening of reform, we believe that the military industry chain will show three development trends: marketization, industry emphasis on efficiency and management quality, more perfect market-oriented operation mechanism and benign competition among subjects at all levels; Specialization, clearer division of labor, and the main engine factory focuses on the capacity construction at both ends of R & D and general assembly; Civilian military enterprises start with “supporting” and march into “core” and “key” fields, and the concentration of subdivided fields is gradually increased; Scale: the market ceiling is raised, and the scale effect appears, helping enterprises in all links to reduce costs and increase efficiency; The share of civilian military enterprises has risen to a higher level, from “small and beautiful” to large-scale.
3. There are more and more high-quality listed companies in the military industry. In recent years, with the outbreak of the industry, the reduction of the threshold for civilian participation in the army and the arrival of the registration system, on the one hand, the subordinate companies of military central enterprises have actively moved towards the capital market, on the other hand, the market space of civilian participation in the army enterprises has been rising, and the number of civilian participation in the army listed enterprises has increased.
4. The market’s awareness of military industry is strengthening, and the activity and attention of military industry in the capital market continue to increase. This can also be confirmed from the continued increase of public funds in the military industry.
In 2022, the high prosperity of the military industry continues, and the new changes are reflected in several aspects. First, the conflict between Russia and Ukraine has strengthened the security demands of various countries, or will stimulate a new round of global military spending. At the same time, it has opened the global military trade market and raised the ceiling of the military industry. Military trade will become the “second curve” of the military industry; Second, the industry presents the principle of changing price by quantity and creating profit by efficiency. From the perspective of military industrial central enterprises, the guidance of the assessment indicators of two benefits and four rates, focusing on the main business, paying attention to R & D and general assembly, opening and socialized cooperation, and increasing equity incentives are conducive to stimulating the vitality of enterprises and giving play to the leading role of the chain leader of the industrial chain. For civilian military enterprises, they benefit from the reduction of the threshold for joining the army, the improvement of supporting levels and ushering in the development dividend period, From a young age, the United States has gradually stepped into large-scale and professional development; Third, China’s large aircraft has gradually shifted from the development stage to the industrialization stage; Fourth, 2022 is the last year of the three-year action plan for the reform of state-owned enterprises. All military industrial groups have proposed to accelerate the implementation of the three-year action reform task, complete the annual goal on time and with quality, and realize that comprehensively deepening reform, promoting high-quality development and improving asset securitization rate are one of the key tasks, which has begun to show an accelerating trend.
A: the military industry has changed from theme investment to value investment, and has grown from concept to growth. There are two reasons: on the one hand, the quality of the military industry, with solid fundamentals and high certainty, is in the best era in history; On the other hand, it is the quality of Listed Companies in the military industry, and a large number of excellent industry representative companies go to the capital market. 2021 is the first year of the 14th five year plan. The whole industry has shown a high level of demand, time waits for no man, and supply is in full swing. The reform mechanism of state-owned enterprises is full of endogenous vitality, and private enterprises are working hard to seize historic opportunities. At present, it is only the early stage of the comprehensive expansion of military industry, the beginning of realizing the three important goals of “2027, 2035 and 2050”, and the prelude to the golden age of military industry.
The military industry is expected to usher in a new era and era in which both growth and value are combined, the landscape continues to improve, and the high boom growth expectation is constantly consolidated, verified and strengthened.
ask : what do you think are the most important investment opportunities in the national defense industry segment in 2022? Why
A: these four words are the core of weapons and equipment construction and the source of looking for investment opportunities. We have four judgments:
1. Attack is greater than defense, the number of traditional ground combat and coastal defense equipment is moderately reduced, and the development of new equipment such as high-sea defense and long-range attack is accelerated;
2. The performance elasticity of the main engine factory comes from the improvement of profit margin, and the performance elasticity of the people’s participation in the army comes from undertaking spillover capacity and domestic substitution;
3. The aerospace industry chain has a particularly high outlook;
4. The value volume and value proportion of military electronics and military new materials have been increasing, and the growth rate is faster.
Specifically,
military aircraft: officially entering the “20th era”, with clear industry demand and upward performance inflection point
With the accelerated loading of “20 models” such as j-20, yun-20 and zhi-20, China’s aviation equipment has officially entered the “20 era”. The air force is accelerating the transformation from land air defense to attack and defense in accordance with the strategic requirements of “integrating air and space and both attack and defense”; The Navy’s demand for shipborne models has increased rapidly; The army has accelerated into the era of three-dimensional operations, and military aircraft drive the army to “fly”. The development of military aircraft has ushered in the best era in history, with clear demand and increasingly mature supporting facilities, and the inflection point of industry performance is upward.
missile: high consumption, high growth
Driven by the demand for “consumptive supplement of mature models of equipment” and “finalized mass production of new models of equipment”, the market growth rate of China’s missile complete machine manufacturing field in the 14th five year plan is expected to remain above 40%, the listed companies in the middle and upper reaches of the industrial chain are expected to maintain a high growth rate, and the high point of production capacity is located in the middle and late stage of the 14th five year plan.
Beidou: maturing and accelerating application
On July 30, 2020, the completion and opening ceremony of the beidou-3 global satellite navigation system was held in Beijing, marking the decisive victory of the “three-step” development strategy of the project, and China has become the third country in the world to independently own the global satellite navigation system. It is suggested to pay active attention to enterprises integrating the industrial layout of “high-precision Beidou navigation +” and “+ high-precision Beidou navigation”, especially the downstream operation field of high-precision Beidou navigation, which is expected to achieve rapid development in the 14th five year plan.
Satellite Internet: new field, big space
In April 2020, Satellite Internet was designated as one of the “new infrastructure” information infrastructures by the national development and Reform Commission. In April 2021, China Spacesat Co.Ltd(600118) Network Group Co., Ltd. was established. It may be the “national team” to coordinate, plan and operate China’s low earth orbit satellite Internet, playing a leading role in the development of China Spacesat Co.Ltd(600118) Internet industry, especially in the field of low earth orbit satellite Internet China Spacesat Co.Ltd(600118) Internet industry as a whole is still in the early stage of development, but as a “blue ocean” to be expanded, it contains a large market space.
military electronics: superposition of three factors of equipment informatization, intelligence and localization, and actively expand production under high scenery
During the 14th Five Year Plan period, the military electronics industry will usher in a golden period of rapid growth driven by the three “accelerations” of the improvement of informatization level in weapons and equipment, the batch loading of informatization weapons and equipment and the acceleration of localization substitution.
military materials: industry cornerstone, rapid production expansion
“Next generation weapons, next generation materials”. Materials play an important role in the national defense industry and are a prerequisite for the development of high-end weapons and equipment. In the environment of rapid and large-scale equipment in the 14th five year plan, military materials as the foundation also ushered in the “golden age”. During the 14th Five Year Plan period, the market demand for titanium alloy, superalloy and carbon fiber is expected to maintain stable and rapid growth, and the market space is gradually opened.
ask : can you tell ordinary investors what are the main indicators to measure whether national defense military enterprises enter the field of value investment
A: we believe that the core assets of the military industry have entered a long business cycle and have entered the field of value investment, which has basically formed a consensus. The net profit of the industry has maintained a high growth rate, the roe of the industry has continued to improve, and the advance receipts and contract liabilities of the main engine plant have increased significantly, which are all observable, traceable and explicit strong indicators.
It should also be noted here that the military industry lacks high-frequency data verification. It is recommended not to judge the industry trend by the change of short-term performance, but from the overall perspective. Since the beginning of the year, the military industry has been under various pressures. Upstream price increases have compressed industry profits, intensified competition has impacted the existing pattern, the reform of military pricing mechanism, concerns about tax increases, doubts about performance fulfillment, and so on. However, many of the above questions, as well as several events in the military industry, can be analyzed, explained and clarified with a unified principle. When we look at all kinds of problems from a broader perspective and principled thinking, we will not fall into a certain detail, so that the investigation is unclear and unclear, resulting in one-sided or even wrong understanding. As a matter of fact, the situation faced by the military industry in the 14th five year plan is that the demand is unprecedented, the current supply is in short supply, and the industry has entered a new round of production expansion cycle. After decades of investment, the military industry has basically met the technical basis and material conditions of “internal circulation”. The next 10 to 15 years will be the harvest period and blowout period of weapons and equipment construction. One principle is to ensure quality, quantity and delivery. Military training and preparation has been the core of these years and the target direction of weapons and equipment construction. In particular, the current world situation is changeable and the demand for a strong army is becoming increasingly urgent. It is necessary to “speed up the construction of a new development pattern of weapons and equipment construction, go all out to speed up the modernization of weapons and equipment, and promote the construction of weapons and equipment of our army to a new level at a new starting point”.
