On the first trading day of May, the defense and military industry sector collectively strengthened, rising 3.23% as a whole, outperforming the Shanghai Composite Index (up 0.68%). Among them, Chengdu Jouav Automation Tech Co.Ltd(688070) , Guizhou Space Appliance Co.Ltd(002025) , Lihang technology and other three stocks rose by the limit, Tongyi Aerospace rose by 19.01%, and Chengdu Zhimingda Electronics Co.Ltd(688636) , Nanjing Quanxin Cable Technology Co.Ltd(300447) , Gaona Aero Material Co.Ltd(300034) , Chengdu Ald Aviation Manufacturing Corporation(300696) and other four stocks also rose by more than 8%.
In fact, the performance of the defense industry sector has been weak this year, with an overall decline of 31.97%, underperforming the Shanghai Composite Index (a cumulative decline of 15.72% during the year). Among them, the share prices of 71 stocks retreated by more than 30% during the year, and the share prices of 6 stocks including Huaxun Fangzhou Co.Ltd(000687) , St Xinyan, Shenzhen Consys Science&Technology Co.Ltd(688788) , Raytron Technology Co.Ltd(688002) , Wuxi Hyatech Co.Ltd(688510) , Avicopter Plc(600038) , etc. retreated by more than 50% during the year.
In this regard, Chen Li, chief economist and director of the Research Institute of Chuancai securities, who was interviewed by the reporter of Securities Daily, said that the reasons for the better performance of the national defense and military industry sector today are: on the one hand, the long-term oversold of the sector in the early stage, and the recent disclosure of the annual report of 2021 and the first quarterly report of 2022, once again
It shows the sustainability of the performance growth of the sector itself, and the valuation and growth of some military civilian integration targets with small and medium market capitalization are even low; On the other hand, the prosperity of the defense industry is less affected by the repeated epidemic in China, and international geographical conflicts will objectively increase the market attention and capital allocation demand of the industry. It is expected that the prosperity of the national defense and military industry will continue in the next three to five years. It is one of the few manufacturing sectors with deterministic growth and valuation matching in 2022. It is suggested to pay attention to the current oversold rebound opportunities and select the growth targets of the people’s participation army with definite performance growth and reasonable low valuation.
Institutions generally believe that the military industry sector currently has three advantages:
First, the performance growth continued to exceed expectations. Data show that in 2021, 119 listed companies in the defense and military industry had a total net profit attributable to the parent company of 30.902 billion yuan, a year-on-year increase of 11.60%. Among them, 79 companies achieved year-on-year growth in net profit attributable to their parent during the reporting period, accounting for nearly 70%. During the reporting period, 11 companies achieved a year-on-year doubling of the net profit attributable to the parent company.
Listed companies in the defense and military industry not only handed over a bright performance report card in 2021, but also generally performed well in the first quarter of 2022. The net profit of the parent company increased by nearly 80% in the first quarter of this year. Among them, 19 companies doubled their net profit to their parent in the first quarter of this year.
After further combing the relevant data, it is found that 47 companies achieved “double growth” in net profit in the first quarter of 2021 and 2022 Sichuan Haite High-Tech Co.Ltd(002023) , Kingsignal Technology Co.Ltd(300252) , Avic Heavy Machinery Co.Ltd(600765) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , North Navigation Control Technology Co.Ltd(600435) , and the net profit of five companies in the first quarter of 2021 and 2022 increased by more than 100% year-on-year.
Second, the valuation is at an all-time low. “The high cost performance of the defense and military industry sector has become more prominent and is expected to rebound. Since the beginning of 2022, the CSI military industry index has fallen by more than 30%, the valuation of the sector has been fully digested, and the high cost performance has become more prominent. At present, the overall valuation of the military industry sector is 55 times, which is at an all-time low. At present, the military industry sector is at a key node in the diffusion of local prosperity to overall prosperity, and the performance acceleration inflection point of midstream and downstream companies is expected to come. At present, the valuation of the sector is expected The level is equivalent to the lowest valuation in 2021 and has higher investment performance price ratio. It is suggested to firmly increase the allocation proportion. The sector is expected to regain its upward trend after the final shock bottoming stage. ” China Securities Co.Ltd(601066) Securities said.
Finally, the North pays attention to high capital. Since this year, as “smart money”, northbound funds have also poured into the national defense and military industry sector for layout. Statistics show that this year, as of April 29, the end of April 29 this year, a total of 31 national defense industry shares have been put into NorthNorth funding for the year to April 29. Statistics show that this year, as of April 29, a total of 31 this year, a total of 31 this year, a total of 31. As of April 29, a total of 31 this year, as of April 29. Statistics show, this year, this year, this year’s statistics show that, as of April 29, this year, a total of 31 national defense industry shares have been put into NorthNorth facing funding to add North funding, the most sought by NorthNorth funding during the period of Hongda Xingye Co.Ltd(002002) Avic Electromechanical Systems Co.Ltd(002013) 0132013 fiveindividual stocks, including and others, also received more than 5 million northward funds during the period, which is worthy of attention.
Supported by the oversold stock price and the higher than expected performance growth, the funds have continuously used ETF to layout the national defense and military industry sector. From the beginning of the year to May 5, the latest scale of national defense and military industry ETF (512810) was 316 million, an increase of 82 million over the end of last year, an increase of 35.07%, a new high in recent five years. The defense and military ETF rose 3.45% on the first day of May, rising for four consecutive trading days since April 27, with a cumulative increase of 17.42%.
Liu Youhua, deputy director of the wealth Research Department of paipai.com, told reporters about the investment opportunities in the national defense and military industry sector, “The investment logic of the national defense industry has changed from the original concept speculation to the current growth logic. We are optimistic about the investment opportunities of the military industry sector in the future. First, after a large adjustment this year, the overall valuation of the military industry sector has returned to the historical low level. The performance of military enterprises increased rapidly in 2021 and the current military orders are still strong. Therefore, the deviation between the market and fundamentals of the military industry sector is more obvious; second , this year is the closing year of state-owned enterprise reform. The pace of state-owned enterprise reform of military enterprises is expected to accelerate, which is conducive to enhancing the vitality of military enterprises. In addition, during the “14th five year plan” period, various favorable policies of military enterprises continued, which helped to steadily improve the profits of military enterprises. “
Lang Chengcheng, general manager of the research department of Furong fund, said that looking forward to 2022, the demand boom of the military industry remains unchanged. During the “14th five year plan” period, the output of downstream assembly enterprises of main battle equipment is expected to maintain a linear and stable growth. From a medium and long-term perspective, the military industry is currently in a position of low valuation, with both growth and cost performance.
Table: list of defense and military industry stocks with an increase of more than 5% on May 5
