Key investment points:
Market review: as of April 15, 2022, Shenwan defense and military industry fell 4.87% this week, 3.88 percentage points lower than Shanghai and Shenzhen 300 index, ranking 28th among Shenwan 31 industries; Shenwan defense and military industry fell 8.60% this month, losing 7.80 percentage points to the Shanghai and Shenzhen 300 index, ranking 29th among Shenwan 31 industries; Shenwan defense and military industry sector has fallen 29.90% year to date, 14.68 percentage points lower than the Shanghai and Shenzhen 300 index, ranking 30th among Shenwan 31 industries.
As of April 15, 2022, the performance of Shenwan national defense and military industry sector was different this week. From the performance of the last week, the navigation equipment sector was the only rising sector, up 0.58%. Other sectors showed as follows: aerospace equipment sector fell 1.09%, ground military equipment sector fell 2.18%, military electronics sector fell 5.61%, and aviation equipment sector fell 6.16%.
Defense Industry Week view: Shenwan defense industry sector has withdrawn 29.90% since the beginning of the year. The average score of military industry (TTM) in recent ten years is nearly 86.52 times lower than that of the current ten-year TTM; From a medium and long-term perspective, the current industry has a certain cost performance. According to the performance data recently released by military enterprises, the performance of most middle and upper reaches enterprises has achieved high growth, the contract liabilities of most downstream main engine plants have increased significantly year-on-year, and the prosperity of the industry is still good; At present, the main risks in the industry come from the expectation of interest rate increase in the United States and the price rise of upstream materials caused by the Russian Ukrainian war, which erodes the profits of some military enterprises.
The development of the situation in Russia and Ukraine has further exacerbated global instability. In the face of the uncertainty brought about by competition among major powers, all countries have begun to strengthen their own armaments or increase their national defense budgets. A new round of arms race has begun. It is expected that the purchase orders of China and foreign countries will increase significantly. This year is the “closing year” of the reform of state-owned enterprises. The reform of state-owned military enterprises is expected to further accelerate and is expected to activate the vitality of military enterprises. Long term optimistic about the high prosperity of the industry under the demand for equipment upgrading during the 14th Five Year Plan period; From the perspective of usage, with the increase of actual training times, the loss of trainer aircraft and the replenishment of missile inventory are increased. We are optimistic about the aviation industry chain and the missile industry chain with high consumables. On the other hand, they are optimistic about the transfer and transformation of aerospace technology achievements to economic society, the development of Beidou industrial chain under aerospace industry services and the Internet of things, and the development of special chips under the new round of digital currency reform. Suggestions on the subject matter: Aecc Aero-Engine Control Co.Ltd(000738) ( Aecc Aero-Engine Control Co.Ltd(000738) ), Xi’An Triangle Defense Co.Ltd(300775) ( Xi’An Triangle Defense Co.Ltd(300775) ), Avic Heavy Machinery Co.Ltd(600765) ( Avic Heavy Machinery Co.Ltd(600765) ), Unigroup Guoxin Microelectronics Co.Ltd(002049) ( Unigroup Guoxin Microelectronics Co.Ltd(002049) ), China Zhenhua (Group) Science & Technology Co.Ltd(000733) ( China Zhenhua (Group) Science & Technology Co.Ltd(000733) ), Western Superconducting Technologies Co.Ltd(688122) ( Western Superconducting Technologies Co.Ltd(688122) ), Gaona Aero Material Co.Ltd(300034) ( Gaona Aero Material Co.Ltd(300034) ), etc.
Risk warning: the number of new orders due to the decline of market demand is less than expected; The performance of military enterprises decreased more than expected due to the high R & D cost; The price rise of upstream materials caused by the risk of Russian Ukrainian war.
