From the beginning of the year to April 22, the national defense and military industry (CITIC) index decreased by 32.90%, and the point is close to the lowest point of nearly a year on May 11, 2021, which is equivalent to the point on July 8, 2020 before the launch of the demand driven military industry market in the 14th five year plan. From the perspective of comprehensive P / E ratio, on April 22, the comprehensive P / E ratio of the national defense and military industry (CITIC) sector was 53.86x (including multiple targets with high P / E ratio driven by civil ship business and restructuring expectation). The P / E ratio was basically equivalent to that in the same period of 2014 eight years ago, lower than that in early 2019 and before the launch of this round of market at the end of June 2020.
Avic Shenyang Aircraft Company Limited(600760) april 23 disclosed the information of the general meeting of shareholders. The proposal on the financial budget report of Avic Shenyang Aircraft Company Limited(600760) 2022 gives that the operating revenue in 2022 is expected to be 40.668 billion yuan, an increase of 6.580 billion yuan over the same period of the previous year, a year-on-year increase of 19.30%, and the net profit is 2.124 billion yuan, an increase of 428 million yuan over the same period of the previous year, a year-on-year increase of 25.23%. The data is in line with expectations, reflecting the strong demand of downstream hosts during the 14th Five Year Plan period and the overall stable rhythm of annual revenue growth.
Zhuzhou Hongda Electronics Corp.Ltd(300726) 4 disclosed the annual report and the first quarterly report on April 21. In the first quarter, the revenue was 429 million yuan, a year-on-year increase of 13.09%; The net profit attributable to the parent company was 176 million yuan, a year-on-year increase of 2.69%; The net profit attributable to the parent company after deduction was 165 million yuan, a year-on-year increase of 9.36%. The growth rate of net profit attributable to the parent company in the first quarter was lower than the previous market expectation of about 15%, but the growth rate of revenue was basically in line with the expectation. The gross profit margin was basically flat year-on-year, and the decrease in net profit margin was due to the year-on-year decrease in government subsidies (construction of factories in Xiangxiang last year).
The company’s revenue from tantalum capacitor business in 2021 was about 1.17 billion yuan, with a year-on-year increase of 36.47%, of which the annual operating revenue of high-energy mixed tantalum products was close to 600 million yuan, a new high. The revenue of products other than tantalum capacitors was 830 million yuan, a year-on-year increase of 52.77%. The unit price of high-energy tantalum capacitor is high, and the customer’s warehousing acceptance cycle is long; Modules and module products have high supporting levels, and the acceptance cycle is relatively long.
The company’s inventory in 2022q1 was 957 million yuan, an increase of 128 million yuan month on month, which will take time to convert into revenue. We believe that the company’s revenue and profit growth in the first quarter is still restricted by the long order revenue conversion cycle, and the annual performance is expected to achieve faster growth.
In 2021, the company’s overall gross profit margin was 68.73%, a year-on-year decrease of 0.42pct; The net interest rate was 40.80%, with a year-on-year increase of 6.26pct The market is worried about the logical stage falsification of the sharp decline in profit margin after batch price reduction, and the scale effect significantly hedges the impact of price reduction on profitability.
From the beginning of the year to April 22, there were nearly 40 military industrial targets with a decline of more than 40%, and nearly 100 targets with a decline of more than 30%. Looking at the one-year dimension, the risk return ratio of some targets has been very prominent. Looking forward to the next three years, some of the targets can be expected to have a large income space. In terms of the overall trend of the sector, with the less than expected annual reports being cleared one after another, the military industry sector has a high probability of achieving relative excess returns in the next three quarters. In the past two years, the trend change of the military industry index is highly related to the gem index. It is suggested to pay close attention to the change of market style and risk preference, grasp the certainty of performance realization, and select the target from the bottom-up from the perspective of growth and valuation.
Looking forward to 2022, the demand boom of the military industry remains unchanged. During the 14th Five Year Plan period, the output of downstream general assembly enterprises of main battle equipment is expected to maintain a linear and stable growth; Driven by the demand for replenishment, the output of enterprises in the upstream of the industrial chain may show the characteristics of high before low, while the growth of enterprises with large capacity constraints or the space for market share improvement, localization substitution and penetration improvement is expected to be more stable.
Risk tips: 1) equipment price pressure affects the release of performance of some enterprises; 2) Policy adjustment affects market sentiment and suppresses the valuation of the sector in stages; 3) The upward price of upstream resource products pushes up the cost pressure of some raw material enterprises with poor price transmission.
