Core portfolio recommendation: [ Unigroup Guoxin Microelectronics Co.Ltd(002049) ] [ Avic Jonhon Optronic Technology Co.Ltd(002179) ] [ Guizhou Space Appliance Co.Ltd(002025) ] [ Western Superconducting Technologies Co.Ltd(688122) ]
Market performance: this week, the Shanghai Composite Index rose or fell by + 2.02%, the gem index rose or fell by + 2.51%, and the CSI military industry rose or fell by + 1.73%. This week, CITIC defense industry index rose or fell by + 1.81%, ranking 19 / 30; This week, Shenwan defense industry index rose or fell by + 2.08%, ranking 17 / 31. Year to date, the rise and fall of Shanghai composite index is - 13.55%, the rise and fall of gem index is - 27.25%, and the rise and fall of CSI military industry is - 27.34%. CITIC defense industry index rose or fell by - 27.64%, ranking 28 / 30; Shenwan defense industry index rose or fell by - 28.29%, ranking 29 / 31.
Sector Valuation: at present, the pe-ttm of CITIC defense and military industry index is 57.76, which is at the quantile of 9.72% in the past five years. The pe-ttm of Shenwan national defense industry index is 51.63, which is in the 1.65% quantile of the past five years. The safety margin of the military industry sector is obvious.
Three main lines for national defense and military industry investment. 1. With the increase of the relative and absolute value of military expenditure, the orders of main engine manufacturers are expected to continue to be signed. It is suggested to pay attention to the core barrier main engine manufacturers such as [ Avic Shenyang Aircraft Company Limited(600760) ] [ Avic Xi'An Aircraft Industry Group Company Ltd(000768) ]; 2. The release of production capacity is expected to stimulate the prosperity of upstream industries. The aeroengine industry chain is one of the best quality tracks in the military industry sector and has good elasticity in the long run. [ Baoji Titanium Industry Co.Ltd(600456) ] [ Western Superconducting Technologies Co.Ltd(688122) ] and other upstream raw material manufacturers overcame the rising pressure of raw materials in the first quarter and continued to be optimistic about the performance growth of subsequent companies; [ Avic Heavy Machinery Co.Ltd(600765) ] [ Wuxi Paike New Materials Technology Co.Ltd(605123) ] [ Xi'An Triangle Defense Co.Ltd(300775) ] [ Guizhou Aviation Technical Development Co.Ltd(688239) ] and other casting and forging factories have achieved good performance, which shows that the Hangfa industrial chain is still a high-quality track with long slope and thick snow. Therefore, we continue to be optimistic about the development potential of the track in the later stage. We suggest to pay attention to [ Baoji Titanium Industry Co.Ltd(600456) ] [ Western Superconducting Technologies Co.Ltd(688122) ]; 3. Of course, there are new targets related to national defense informatization, which are replaced by the localization of existing equipment, and the proportion of informatization is gradually increasing. The track is not easily affected by the rise and fluctuation of raw material prices, and there is still good growth certainty at the current time point. We suggest paying attention to the relevant targets [ Unigroup Guoxin Microelectronics Co.Ltd(002049) ], [ China Zhenhua (Group) Science & Technology Co.Ltd(000733) ], etc.
Risk warning: the release and delivery of military orders are not as expected; Performance growth is less than expected; The reform of state-owned enterprises did not advance as expected.
