Investment advice
[core combination] Avic Xi’An Aircraft Industry Group Company Ltd(000768) , Avicopter Plc(600038) , Aecc Aviation Power Co Ltd(600893) , Jiangxi Hongdu Aviation Industry Co.Ltd(600316) , Avic Shenyang Aircraft Company Limited(600760) , Inner Mongolia First Machinery Group Corporation Co.Ltd(600967) , Unigroup Guoxin Microelectronics Co.Ltd(002049) , Western Superconducting Technologies Co.Ltd(688122) , China Cssc Holdings Limited(600150) , China Marine Information Electronics Company Limited(600764)
[Key stock pool] Avic Heavy Machinery Co.Ltd(600765) , Avic Electromechanical Systems Co.Ltd(002013) , Aecc Aero-Engine Control Co.Ltd(000738) , Avic Aviation High-Technology Co.Ltd(600862) , China Avionics Systems Co.Ltd(600372) , Fushun Special Steel Co.Ltd(600399) , Gaona Aero Material Co.Ltd(300034) , Jiangsu Toland Alloy Co.Ltd(300855) , Western Superconducting Technologies Co.Ltd(688122) , Baoji Titanium Industry Co.Ltd(600456) , Weihai Guangwei Composites Co.Ltd(300699) , Xi’An Triangle Defense Co.Ltd(300775) , Chengdu Leejun Industrial Co.Ltd(002651) , Anhui Yingliu Electromechanical Co.Ltd(603308) , Wuxi Paike New Materials Technology Co.Ltd(605123) , Guizhou Aviation Technical Development Co.Ltd(688239) , Wuxi Hyatech Co.Ltd(688510) , Wuhan Guide Infrared Co.Ltd(002414) , Zhejiang Dali Technology Co.Ltd(002214) , Xi’An Bright Laser Technologies Co.Ltd(688333) , Weihai Guangtai Airport Equipment Co.Ltd(002111) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Fujian Torch Electron Technology Co.Ltd(603678) , Chengdu Zhimingda Electronics Co.Ltd(688636) , Raytron Technology Co.Ltd(688002) , Beijing Beimo High-Tech Frictional Material Co.Ltd(002985)
[last week’s report] national defense strategy for 2022: endogenous epitaxial two wheel drive, determined to catch up from behind
[views of this week] (1) on Xi Jinping 4, the president signed the order No. 1 of the Central Military Commission in 2022 and issued a training mobilization order to the whole army. The state continues to emphasize military training and preparation, and the industrial chains such as air launched engines / missiles with consumable attributes will continue to benefit.
(2) new steps have been taken in the reform of Suzhou Electrical Apparatus Science Academy Co.Ltd(300215) Institute of China. Recently, CETC held a special meeting on the reform promotion of 33 institutes, China network security, 43 institutes, CETC Bowei, 9 institutes, CETC sound optoelectronics, 23 institutes and CETC Guorui. The group promoted the management system reform of four research institutes (33, 43, 9 and 23).
(3) Aecc Aero-Engine Control Co.Ltd(000738) , Aecc Aviation Power Co Ltd(600893) 2022 related party transaction announcement shows that the aviation development industry chain is expected to grow rapidly in 2022. Aecc Aero-Engine Control Co.Ltd(000738) and Aecc Aviation Power Co Ltd(600893) have recently successively issued the announcement on the forecast of related party transactions in 2022. In Aecc Aero-Engine Control Co.Ltd(000738) 2022, the related sales increased by 39% compared with the actual amount in 2021, and in Aecc Aviation Power Co Ltd(600893) 2022, the related purchase increased by 34% compared with the actual amount in 2021.
[core view] the deterministic growth of national defense is high. In 2022, it will enter the two wheel drive sweet period of “business cycle + asset integration” and “endogenous + extension”, and “domestic demand + foreign trade” and “military products + civilian products”. The military industry index is expected to replicate the performance of the wind power index in the second half of 2021 in 2022, and the latter ranks first: (1) the deterministic growth of national defense industry is high under the “century change”. “Preparing for war / 2027 / building a strong national defense commensurate with the second largest economy” is the established direction. Large contract liabilities in 2021 highlight the high boom of the 14th five year plan. (2) In the next few years, the securitization of national defense and military assets and the reorganization and listing of core military products are expected to set off a new climax. CSSC’s companies have started restructuring, and the restructuring of the top ten military industrial groups is expected to increase significantly. Pay attention to the restructuring process of CSSC / Aerospace Hi-Tech Holding Group Co.Ltd(000901) / CETC / AVIC / Aerospace Science and industry / ordnance industry and other groups. (3) China’s main battle tank / UAV / Trainer / fighter have global competitiveness, and the demand for foreign trade will gradually rise. Domestic large civil aircraft / civil aviation engines and other industrial chains are also gradually growing.
Defense and military industry: we are optimistic about the missile / information technology / Aviation Development / military aircraft sub industry, scale effect + refined management, “small core and large cooperation”. The performance of national defense mainframe will be flexible in the next five years. With the conclusion of the “three-year action of state-owned enterprise reform”, equity incentive is expected to accelerate the release of performance: Avic Xi’An Aircraft Industry Group Company Ltd(000768) , Avicopter Plc(600038) , Aecc Aviation Power Co Ltd(600893) , Jiangxi Hongdu Aviation Industry Co.Ltd(600316) , Avic Shenyang Aircraft Company Limited(600760) , Inner Mongolia First Machinery Group Corporation Co.Ltd(600967) , China Cssc Holdings Limited(600150) .
2. Continue to be optimistic about high-tech barriers, high scarcity and competitive high-temperature alloy / composite materials / midstream component level supporting enterprises / engine forging castings / information core midstream and other midstream and upstream sub circuits: Avic Heavy Machinery Co.Ltd(600765) , Fushun Special Steel Co.Ltd(600399) , Gaona Aero Material Co.Ltd(300034) , Western Superconducting Technologies Co.Ltd(688122) , Anhui Yingliu Electromechanical Co.Ltd(603308) , Chengdu Leejun Industrial Co.Ltd(002651) , Wuxi Paike New Materials Technology Co.Ltd(605123) , Guizhou Aviation Technical Development Co.Ltd(688239) , Xi’An Triangle Defense Co.Ltd(300775) , Wuxi Hyatech Co.Ltd(688510) , Avic Electromechanical Systems Co.Ltd(002013) , China Avionics Systems Co.Ltd(600372) , Xi’An Bright Laser Technologies Co.Ltd(688333) , Jiangsu Toland Alloy Co.Ltd(300855) .
3. Missile and informatization: Unigroup Guoxin Microelectronics Co.Ltd(002049) , Fujian Torch Electron Technology Co.Ltd(603678) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Chengdu Zhimingda Electronics Co.Ltd(688636) , Wuhan Guide Infrared Co.Ltd(002414) , Zhejiang Dali Technology Co.Ltd(002214) .
Key bullish on defense Hong Kong stocks: AVIC.
Risk tips
1) the development progress of advanced models is less than expected; 2) Equipment procurement volume or delivery confirmation rhythm is lower than expected
