Core ideas of this week
1) the annual work meeting of aviation industry was held in Beijing to deploy key tasks in 2022. On January 12, the 2022 work conference of AVIC was held in Beijing. Guided by the thought of socialism with Chinese characteristics in the Xi Jinping new era, the conference comprehensively implemented the spirit of the 19th National Congress of the Communist Party of China and all previous plenary sessions of the 19th National Congress of the Communist Party of China. On the basis of summarizing the work in 2021, the conference grasped the overall situation, unified thinking, strengthened measures and overall mobilization, and deployed key tasks in 2022. Relevant leaders of the aviation industry attended the meeting and made a representative. The Party group of the aviation industry made a work report entitled “adhering to integrity, innovation, firm courage and perseverance, and unremitting efforts to build an aviation power in the new era”, defined 2022 as the “new year” of the aviation industry, and systematically deployed eight key tasks: grasping advanced equipment and supporting new quality combat effectiveness; Pay close attention to scientific and technological innovation and create leading innovation; Pay close attention to industrial development and enhance industrial competitiveness; Grasp the ability of digital intelligence and enable high-quality development; Pay close attention to tackling key problems in reform and realize the end of the three-year action of state-owned enterprise reform; Grasp the basic management and promote the system to create excellence and efficiency; Pay close attention to team building and create an entrepreneurial atmosphere for officers; Do a good job in comprehensively and strictly administering the party to ensure the healthy development of enterprises. While summing up the achievements, the report also analyzes the complex situation in which the aviation industry is facing various contradictions and risks, and the difficulties and challenges are significantly increasing. It also implements the “14th five year plan” of the aviation industry in five aspects: scientific and technological innovation, equipment development, civil aircraft industry, reform and improvement and business performance, and clearly puts forward the work objectives for 2022. Aviation industry group defines the work guidance direction and objectives of this year, which will help drive the development of its listed enterprises, and the aviation industry and related listed companies are expected to fully benefit.
2) the Chinese and Indian armies held the 14th round of military commander level talks to release positive signals on solving border contradictions. According to Xinhua news agency, the Chinese and Indian armed forces held the 14th round of military commander level talks on the Chinese side of the Mordo / chushule meeting point on January 12, with the participation of representatives of the national defense and foreign affairs departments of the two countries. The two sides continued to have a frank and in-depth exchange of views on promoting the settlement of relevant issues in the area of the actual control line in the western section of the China India border. The two sides agreed to resolve the remaining issues as soon as possible in accordance with the guidance of the leaders of the two countries. The two sides said that this will help restore peace and tranquility in the western section of the line of actual control and promote bilateral relations. The two sides agreed to continue to consolidate the achievements and take effective measures to maintain security and stability in the western region, including winter. The two sides agreed to continue to maintain communication through military and diplomatic channels and reach a mutually acceptable solution as soon as possible through dialogue and consultation. The two sides agreed to hold the next round of military commander level talks as soon as possible. There are many uncertain factors in the surrounding situation. The relevant military regions are still actively training and preparing for war to deal with external threats. It is expected that the military industry chain will continue to benefit under this background.
Focus on aviation, aerospace, informatization and new materials:
1) aviation equipment: both the surrounding situation and the construction of Navy and air force have put forward new requirements for military aircraft. At present, there is a large room for improvement in the number and structure of Chinese military aircraft. It is expected that with the national defense budget inclined to weapons and equipment, especially the air force and Navy, it is expected to accelerate the change of military aircraft. The disclosure of large contract liabilities by many companies in the early stage may further improve the cash flow of the industrial chain and promote the production and delivery of products. We believe that aviation equipment will show a high boom during the 14th Five Year Plan period, driving the improvement of industrial chain performance. In addition, the reform of military pricing mechanism and the increase of equity incentive scheme will also promote the improvement of industry profit level. It is suggested to pay attention to: [ Avic Shenyang Aircraft Company Limited(600760) ], [ Avic Xi’An Aircraft Industry Group Company Ltd(000768) ], [ Jiangxi Hongdu Aviation Industry Co.Ltd(600316) ], [ Aecc Aviation Power Co Ltd(600893) ], [ Avic Electromechanical Systems Co.Ltd(002013) ], [ Hefei Jianghang Aircraft Equipment Co.Ltd(688586) ], [ Beijing Beimo High-Tech Frictional Material Co.Ltd(002985) ], [ Avic Jonhon Optronic Technology Co.Ltd(002179) ], [ Avic Heavy Machinery Co.Ltd(600765) ], [ Wuxi Paike New Materials Technology Co.Ltd(605123) ], [ Guizhou Aviation Technical Development Co.Ltd(688239) ], [ Chengdu Ald Aviation Manufacturing Corporation(300696) ], [ Jiangsu Maixinlin Aviation Science And Technology Corp(688685) ].
2) aerospace equipment: in terms of missile weapons and equipment, the main driving factors of the missile industry mainly come from: the first is the iterative period, the second is the increase in the demand for strategic reserves, and the third is driven by practical training. The missile sector may be the most flexible segment during the 14th Five Year Plan period, which will bring rapid performance thickening of relevant listed companies, pay attention to the overall opportunities of the missile sector, and give priority to the targets with high performance flexibility and high proportion of missile business. It is suggested to pay attention to: [ Guizhou Space Appliance Co.Ltd(002025) ] and [ Beijing Relpow Technology Co.Ltd(300593) ]. In terms of Satellite Internet, Beidou navigation: the year-on-year growth rate of Beidou satellite navigation industry chain began to increase in 2021, and it is expected to maintain a high growth rate in 2022 and 2023. In Beidou navigation industry chain, the demand for Beidou navigation chips and Beidou navigation terminals increased rapidly; Satellite internet field: China Spacesat Co.Ltd(600118) network group is expected to become the main force of China Spacesat Co.Ltd(600118) Internet. At present, although China Spacesat Co.Ltd(600118) Internet is still in the early stage of development, Satellite Internet will still become an important development direction of 6G mobile communication. It is suggested to pay attention to: [ Chengdu Corpro Technology Co.Ltd(300101) ] and [ Chengdu M&S Electronics Technology Co.Ltd(688311) ].
4) informatization sector: due to factors such as the localization process, military modernization and accelerated update of new models, it has continued to surpass the growth of the industry since 2018, paying attention to military semiconductors, upstream electronic components, radar and electronic countermeasures, communication, navigation and remote sensing, and the performance of some companies has taken the lead in entering the stage of rapid growth, It is expected to continue in 2022. It is suggested to pay attention to: [ China Zhenhua (Group) Science & Technology Co.Ltd(000733) ], [ Unigroup Guoxin Microelectronics Co.Ltd(002049) ], [ Chengdu Zhimingda Electronics Co.Ltd(688636) ].
5) new materials: it is suggested to focus on the direction of superalloys, titanium alloys and carbon fiber composites. The military new material technology has basically realized self-control and represents China’s leading level, and the dual / multi flow system of model certification makes the suppliers limited, the competition pattern at the supply end is good, the demand end is due to the large volume of main battle models and supporting engines, the proportion of new material application is increasing, the outsourcing proportion of main engine manufacturers is increasing, domestic substitution and other factors, It is expected that the future growth of the industry is highly uncertain, and the scale effect will continue to appear after the demand increases, driving the continuous decline of unit cost. Therefore, the gross profit margin of the industry may still have room to improve and gradually realize to profit, and it is possible to urgently explore the civil market, with good long-term growth. It is suggested to pay attention to: [ Baoji Titanium Industry Co.Ltd(600456) ], [ Gaona Aero Material Co.Ltd(300034) ], [ Western Superconducting Technologies Co.Ltd(688122) ], [ Avic Aviation High-Technology Co.Ltd(600862) ].
Risk warning: the replacement of weapons and equipment is not as expected; The development of a new missile model was not as expected.
