A sharp correction in the military industry sector at the beginning of the year: since the beginning of 2022, the military industry sector has made a sharp correction, with the CSI military industry index down 15.7% and the gem index down 8.7%; There was a similar performance in the same period last year. In January 2021, the CSI military industry index fell by 7.4% and the gem index rose by 5.5% in the same period. We believe that during the 14th Five Year Plan period, the upgrading of equipment is accelerated, the demand of supporting enterprises in the industrial chain is large-scale and uncertain, and the boom expansion is still in the conduction stage. The aviation equipment sector has fallen by 20.4% since the beginning of the year, which is greater than the average value of the military industry; The PE of the sector has dropped from 79 times to 63 times, which is 72 times lower than that of the aerospace equipment sector, and the configuration value appears.
The performance was lower than expected and the market sentiment was affected: the performance forecast was released on Friday Avic Shenyang Aircraft Company Limited(600760) and Avic Electromechanical Systems Co.Ltd(002013) . The operating revenue of Avic Shenyang Aircraft Company Limited(600760) is expected to increase by about 25% year-on-year, and the net profit attributable to the parent company is expected to be 1.696 billion yuan, an increase of about 14.56% year-on-year; Avic Electromechanical Systems Co.Ltd(002013) the operating revenue is expected to increase by 22.59% year-on-year, and the net profit attributable to the parent company is expected to be 1.259 billion yuan, with a year-on-year increase of 17.18%. Q4 net profit attributable to parent decreased by 24.3% and 17.7% respectively, lower than previous market expectations.
The boom expansion of the industrial chain is conducted orderly and optimistic about the allocation value of individual stocks: the military industry sector has a sharp correction due to the impact of performance fluctuations and market sentiment in the short term, and the logic of long-term boom expansion remains unchanged. The verification of advances received by downstream enterprises and the landing of large orders will be conducted in an orderly manner to the upstream and midstream along the industrial chain. During the “14th five year plan” period, the demand of supporting enterprises is large-scale and uncertain, and the performance of private leaders will be more flexible.
Grasp the main line of aviation equipment investment, and the independent and controllable growth of military electronics is high: 1) the contract liabilities of main engine factory + verification of advance payment, and the growth of aviation industry chain will continue to be realized. The performance transmission is effective. From the main engine plant and engine system, to the body system and parts, and then to the upstream raw material sector, the whole industry chain has strong momentum and certainty. The OEM pays attention to Avic Shenyang Aircraft Company Limited(600760) , Avic Xi’An Aircraft Industry Group Company Ltd(000768) , Jiangxi Hongdu Aviation Industry Co.Ltd(600316) , Avicopter Plc(600038) , Aecc Aviation Power Co Ltd(600893) ; Body system concerns Avic Electromechanical Systems Co.Ltd(002013) , China Avionics Systems Co.Ltd(600372) , Aecc Aero-Engine Control Co.Ltd(000738) , Beijing Beimo High-Tech Frictional Material Co.Ltd(002985) ; Aviation parts focus on 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) ; Metal materials focus on Western Superconducting Technologies Co.Ltd(688122) , Baoji Titanium Industry Co.Ltd(600456) , Gaona Aero Material Co.Ltd(300034) , Jiangsu Toland Alloy Co.Ltd(300855) . 2) The certainty of missile weapons and equipment benefits from practical military training. The independent control of military electronics in the field of high-end equipment brings high growth. We pay attention to Chengdu Tianjian Technology Co.Ltd(002977) , Beijing Relpow Technology Co.Ltd(300593) , Avic Jonhon Optronic Technology Co.Ltd(002179) , Guizhou Space Appliance Co.Ltd(002025) , Beijing Yuanliu Hongyuan Electronic Technology Co.Ltd(603267) , Beijing Fjr Optoelectronic Technology Co.Ltd(688272) .
Risk warning: the epidemic situation fluctuates and the military investment is less than expected; Equipment R & D progress and procurement progress are less than expected; Military procurement prices fell; Industry competition intensifies.
