1. Market review this week
This week, the Shenwan defense and military industry index rose by 2.08%, the Shanghai Composite Index rose by 2.02%, the gem index rose by 2.51%, and the Shanghai and Shenzhen 300 index rose by 2.23%. The rise of the defense and military industry sector ranked 17th among the 31 Shenwan level industries.
The largest increase was 0.86% on Tuesday (May 17). As of Friday’s closing, the PE (TTM) of Shenwan national defense and military industry sector was 51.63 times, the aviation equipment in each sub sector was 53.89 times, the aerospace equipment was 52.18 times, the ground military equipment was 47.26 times, the military electronics was 40.73 times and the navigation equipment was 144.12 times. At present, the PE (TTM) quantile of Shenwan national defense military industry index in the past ten years is 12.11%, and the PE (TTM) quantiles of aviation equipment, aerospace equipment, ground military equipment, military electronics and navigation equipment are 14.26%, 12.01%, 13.87%, 3.91% and 76.76% respectively.
2. The dividend of state-owned enterprise reform is expected to be released at an accelerated pace, and attention is paid to the reform and investment opportunities of central military enterprises. According to Xinhuanetco.Ltd(603888) reports, on May 18, Weng Jieming, deputy director of SASAC, said at the “special promotion meeting on deepening the reform of state-controlled listed companies and striving to be a three-year action model for state-owned enterprise reform”, we should continue to increase the injection of high-quality assets into listed companies, and group companies should systematically sort out listed and unlisted resources, For unlisted high-quality assets, they can be injected into listed companies in a planned way, and they can also be listed separately if necessary; We should steadily explore the spin off and listing of qualified multi sector listed companies, and support the spin off and listing of subsidiary enterprises that are conducive to straightening out the business structure, highlighting the advantages of the main business, optimizing the industrial layout and promoting the realization of value; Require state-owned listed companies to revitalize or withdraw from inefficient and invalid listing platforms. At present, China’s military industry is dominated by large state-owned military industry groups, which has the disadvantages of low asset securitization rate and imperfect incentive. We believe that 2022 is the closing year of the three-year reform action of state-owned enterprises, and the reform dividend is expected to be released faster. The mixed reform of state-owned military enterprises is an important part of the reform of state-owned enterprises. It is suggested to focus on the equity incentive of state-owned military enterprises and the investment opportunities of high-quality assets.
3. Several companies have successively issued equity incentive plans, and the business situation of the industry is expected to accelerate the improvement. On May 19, Weihai Guangwei Composites Co.Ltd(300699) issued the 2022 restricted stock incentive plan, which plans to grant 6.25 million restricted shares to incentive objects, accounting for 1.21% of the total share capital of the company. Among them, 5 million restricted shares were granted for the first time, accounting for 0.96% of the total share capital of the company; 1.25 million restricted shares are reserved, accounting for 0.24% of the total share capital of the company. According to the performance indicators of the incentive plan, taking the net profit of 2021 as the base, the target values of net profit growth of the company from 2022 to 25 are 15%, 40%, 70% and 100% respectively, and the trigger values are 10%, 35%, 60% and 90% respectively. On May 30, 2020, on May 30, 2020, 2020, on May 30, 2020, on May 30, 2020, on May 30, 2020, the state owned assets commission issued the guidelines for central enterprises holding listed companies to implement equity incentives, providing systematic guidance for central enterprises to provide systematic guidance for central companies to implement equity incentives. In recent years, the number of equity incentive schemes for companies listed on the military sector has continued to grow in recent years, and the number of equity incentive schemes for companies listed in the military sector has continued to grow in recent years. From the beginning of 2022 to the beginning of the year to the end of the 2022 year to the end of the year, from the beginning of the year of 2022 to the end of the year to the year of 2022, from the year to the present, the state owned assets committee issued the guidelines for the work guidelines for central enterprises holding companies to implement equity incentives for central enterprises holding listed companies, providing systematic guidance for central enterprises listed companies to implement equity incentives for listed companies. The central enterprises to listed companies to listed companies to provide a listed companies to provide a listed companies. In the central enterprises listed yes. We believe that the implementation of equity incentive will help military enterprises establish a long-term incentive and restraint mechanism, give full play to the subjective initiative of the company’s core talents, improve the company’s operating conditions, and then release the space for performance growth.
4. Key recommendations this week
1) focus on recommending upstream military electronic components and raw materials with sustained and high performance: China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Unigroup Guoxin Microelectronics Co.Ltd(002049) , Western Superconducting Technologies Co.Ltd(688122) .
2) recommend midstream aviation manufacturing targets with scale effect gradually emerging and comprehensive supporting capacity expected to be greatly improved: Avic Heavy Machinery Co.Ltd(600765) , Chengdu Ald Aviation Manufacturing Corporation(300696) , Chengdu Haoneng Technology Co.Ltd(603809) , Wuxi Paike New Materials Technology Co.Ltd(605123) .
3) focus on recommending the overall and key systems of weapons and equipment with monopoly and scarcity and huge long-term growth space: Avic Shenyang Aircraft Company Limited(600760) , Aecc Aviation Power Co Ltd(600893) , Avicopter Plc(600038) , Aecc Aero-Engine Control Co.Ltd(000738) , Wuhan Guide Infrared Co.Ltd(002414) and Aerospace Ch Uav Co.Ltd(002389) .
Risk warning: the release and delivery of military orders are not as expected; Performance growth was less than expected.
