Ai Xiaojun+Zhang Chao: The performance of the military sector is bright. In the second half of the year, investment opportunities are geometry?

Live theme: The performance of the military sector in the first half of the year is dazzling, and the investment opportunities in the second half of the year?

Live guest:

Ai Xiaojun: Military ETF (512660) fund manager

Zhang Chao: Chief Analyst of AVIC Securities and Military Industry Industry

Live time: 13:30 on September 16th

1 Review of the report in the military industry

Ai Xiaojun: Hello everyone! We invited Zhang Chao, deputy director and chief of military industry of AVIC Securities Research Institute to exchange investment opportunities in the military industry.

In June and July, we also asked Zhang Chao to communicate with you. I was very impressed. At that time, Zhang Chao reminded that although the public health incident in the second quarter, although the impact of the entire industry, especially the OEMs, was relatively small, but it would inevitably have a certain degree of military industry chain and some civil participating companies. Impact. Then the interim report is also disclosed. We first ask Zhang Chao to share with us on some summaries and observations of the interim report.

Zhang Chao: Okay. I am glad to have the opportunity to communicate with you again. We had a conclusion at the beginning of May that the position of the end of April should be the bottom. At that time, we also gave a clear quantitative indicator. We expect that the military index in early May in the early May of May still has 15%of the upward space of upward space. Some stocks may have 20%-30%of space, and they have been verified afterwards.

In our live broadcast at the end of June, the situation at that time was actually more optimistic expectations for this year's military industry's interim report, but what I gave was relatively cautious and relatively neutral judgment at the time. It is believed that although there are no exceptions in the military industry in the past three years, the interim report is more difficult this year. In July and August, we believe that it is mainly shock. This is better to verify this afterwards.

Looking back at the past, it is not how accurate our predictions are. In fact, there are many complex uncertain factors for short -term predictions, and it is also easier to be beaten. We look back at the purpose of the past, in fact, to explain the inference basis for these predictions at the time, at least it can prove that there is a certain degree of credibility, or that it is relatively close to the real situation. Our last time we held a neutral attitude towards the interim reporting, and it was also an important point of view this year. That is to say, this year should be different from the situation in previous years. Essence

Now the interim report is also disclosed. On the whole, I think the interim report of the military industry is still relatively neutral, but there are no shortage of highlights. From the perspective of data, the growth rate of the military industry in the first half of the year was 16%-17%, and the growth rate of net profit was 18.4%, which was relatively stable. Compared with last year, the growth rate of profits declined. But if horizontal and other industries are compared, this growth rate is still remarkable.

Specifically, I think there are a few points worth mentioning. First, we can engine the engine sector, especially the OEMs such as the driving force of the Air can achieve relatively rapid growth, and the large prepaid payment like Xifei has finally landed; and the most prosperous aerospace sector, still continues to maintain The steady growth rate is that we can see a solid change.

But in fact, standing at this time, because the interim report it has maintained a long time from the end of the prediction to the disclosure, it is more than two months to three months, so the effectiveness of the interim reporting for the current market may be relatively speaking. A lot of discounts have been hit. We can also see that, in fact, with the disclosure of the interim report, the market's response to the expected interim reporting is relatively rational. It has not had a particularly impact and impact on the stock price because the interim report exceeds expectations or does not exceed expectations.

Now I think the entire logic is still gradually trading and annual reports, and even expected to be expected to be in 2023. From the past three consecutive years of military reports, and the so -called lack of interim reporting in 2022 this year, although the performance is different, in fact, it reflects a common problem behind it, which is the current market's cognition of the military industry industry's cognition of the military industry industry. In fact, it has long been invested from the theme of the past to value investment. If the performance can be fulfilled and the value is reflected, it will win market recognition, and the stock price will rise; if the performance cannot come out, the stock price will be sluggish. At present, for the military industry, it is actually four months before the end of the year, and the realization of orders and performance is particularly important.

We believe that the overall growth rate of the military industry throughout the year this year is still expected to be among the best in the industry, and the comparative advantages are unabated. At the same time, with next year, the capacity release of the military industry has gradually accelerated, and at the end of this year, it will soon switch to optimistic expectations for next year. In addition, the overall valuation of the current military industry is in a relatively reasonable value interval. For medium and long -term funds, it is relatively cost -effective and attractive. This is a preliminary judgment based on the central report.

2 In the short mid -in -in the short term, the four attention points in the military industry industry

Zhang Chao: As far as the short period of time, I think there are four aspects worth paying attention to and paying attention.

The first aspect is that more and more equity incentives and employee holding measures will continue to be launched. Because the industry is constantly disclosed, transparent, and marketized from research and development to procurement, coupled with the informatization and intelligence of military industry, the requirements for technological iteration have been greatly improved. The reform of state -owned enterprise reform is constantly deepening, and the benefits of private enterprises are constantly stimulating. Essence From such industrial logic to the requirements of management mechanisms, the management and operation efficiency and mechanism of the industry and enterprises may seem more prominent than ever. This is our so -called marketization of the military industry and the marketization of military mechanisms. Equity incentives are an important manifestation of a marketization mechanism, and it is also an important guarantee for realizing the interests of management, major shareholders and small and medium shareholders. This year is the last year of the three -year operation of state -owned enterprise reform. The finals are as soon as possible. From the perspective of state -owned enterprises and central enterprises, the rhythm of relevant equity incentives will also speed up. For private enterprises, we will continue to maintain such market vitality. We can see a large number of private enterprises in the stage of sale. Before and after the listing, we have worked as employees' shareholding and strategic distribution equity incentives. This is the first aspect, an incentive mechanism.

The second aspect is worth noting that the second curve of the so -called military industry in our premise. The second curve we refer to refers to civil aircraft and military trade other than military aircraft. In fact, we can see that we can see in the short term. 919 is now obtaining a trial certificate, and the first delivery may be completed during the year. Including military trade, we can also see that at the end of last month, the 11th Academy of Aerospace Science and Technology signed a large order of more than 100 million US dollars in Rainbow drones. From the perspective of the interim report, some military industrial enterprises have increased significantly by 60% year -on -year this year's interim reporting year -on -year. Many, mainly because the orders of its military trade are released faster.

In the third aspect, in the short term, it needs to be noted that the Zhuhai Air Show last year was actually due to the delay in public health incidents that year before. In November 2022, the Zhuhai Air Show will still be held in Zhuhai. Weapons and new equipment are unveiled, and I think it is also a stimulus for this industry.

I think from the market point of view, it is far from fully reflecting the long -term impact of this incident on the military industry. The definition, urgency, and importance of our defense military industry is actually even more self -evident. The stimulus of these incidents on the military industry may continue. The above is the four aspects that we feel worth paying attention to in the short term.

Looking a little longer, in fact, I think it ’s more gratifying that there is a more important trend in the military industry. We can see that many military -listed companies have participated in and acquired the industrial chain to cooperate and expand through new equipment companies. We can see that in this round of expansion of the production industry, we can obviously feel that it is now more rational, horizontal, and vertical expansion around the industry.

Under such a prosperous period of supply and demand, the military industry can maintain such an overall rational state. I think it is gratifying, and this is indeed a behavior of enhancing the internal skills of the military industry, and it is also the core of maintaining the long -term vitality of the industry. Although this is not to say that it can boost short -term EPS or PE, this is a substantial benefit for the military industry.

3 Based on the three judgments of the military industry

Zhang Chao: I usually give some clear, quantifiable predictions and conclusions, and I want to talk about some conclusions and judgments at this moment.

The first judgment, the performance growth rate of the military industry in the past year can still be at the forefront of the industry's growth rate, and the performance growth advantage of the military industry will be more prominent.

Although I think there may be a market -style swing in the short term, especially the growth of the growth of real estate and finance recently. But I think the performance is true for the military industry and some other industries.

The second forecast, I think that by the end of the year, the market's expectations and valuations of the military industry will be gradually switched to 2023. Based on a large number of statistics in 2023, it will be the first year of the centralized capacity of the military industry, which means that the growth rate of the military industry will last a new level.

And I am more optimistic about the valuation switching at the end of the year. I think that the military industry has been ready to switch to next year, but it may also need to wait for the market to recover and emotional improvement.

The third judgment, the rise and fall of the military industry throughout the year in 2022 is expected to enter the top 10 in all 31 industries. I remember a prediction in April and May, because at that time, the rise and fall of the military industry in the 31 industries was the penultimate. I predicted that the rise and fall of the military industry could soon get rid of the end. After four or five months, we saw that the rise and fall of military industry from 2022 to the present has risen from 31 to 20. Then by the end of the year, we feel that the ranking of the military industry's rise and fall can still continue to rise, which may reach the top 10.

In terms of specific investment directions, in the short term, we can focus on two aspects. One is the weight stock of the downstream OEMs. I think I will gradually return to the market's vision. The second is the valuation depression in the middle and upstream. In the past, due to several factors, the declines of capacitors and motors were relatively large, and the absolute valuation was relatively low. Overall, I think these two aspects are relatively easy to have absolute benefits. In terms of theme, you can pay attention to Beidou and large planes.

4 risk points in the military industry industry

Zhang Chao: The short -term potential risk point is the market style conversion. Recently, although it is still weak and liquid, the enthusiasm of the market for themes and track stocks has been significantly reduced, and the attention of industries such as real estate, finance, and consumption is increasing. This is my worry. But the good news is that from the perspective of chips, the trading congestion of the military industry is not high. I think this is a better factor. On the one hand, military funds in public funds are still in the median of history, which is not very high. In addition, the military industry ETF (512660) and other passive funds are still flowing into the military industry as a whole.

On the other hand, the north funds in the military industry, including foreign investment such as QFII, have actually been low after the US investment ban in the previous two years. So even if the market style has been transformed, I think the impact on the military industry in the transaction is relatively limited. Of course, this is difficult to predict, and we have to continue observation and tracking.

In general, we must be very confident in the industry. Confidence comes from the fundamental aspects, from the mid -to -long -term prosperity still exists, and the industry's space is still large enough. opportunity. And from the perspective of the year, the military industry has been prepared at any time to switch between 2023 (next year). It may be worse than the factors that we can predict or unpredictable, and can mobilize the emotions of the market and the emotions of funds.

Ai Xiaojun: Okay, very comprehensive. The judgment of the entire industry from the performance to the market is still very clear. In the first half of the year, Chao President also mentioned that in the first half of the year, the performance of the military industry was relatively stable and neutral. In the last live broadcast, we also talked about it. From the perspective of delivery in the third quarter, it should be a major season for military industry. I think there may also be a certain degree of reflection from the market, because from mid -August, the military industry followed the market to call back. In September, in fact, the military industry has actually rebounded to a certain extent. This is actually very difficult.

Therefore, in this case, I think that the military industry can go relatively stable or stronger, mainly with the support of fundamentals and prosperity. Because of the particularity of the military industry, the prosperity of the past few years, including weapons replacement and the latest developments in the industry, it is not like new energy vehicles and chips and other industries that can be announced as soon as possible. Many times, it really needs to wait until the performance disclosure to give you a reassurance.

Therefore, from investment, from our exchange process, I also feel that some investors will have this confusion, and I feel that there are some differences in the military industry's trading strategies in other industries.

But overall in the long run, we now have a considerable part of investors who have gradually abandoned the past theme's investment strategy and pay more attention to the research on the fundamental aspects of the military industry. We must also see this change.

5 The performance outlook for the third quarter of the military industry industry

Ai Xiaojun: Previously, Chao always mentioned that the third quarter may be a military season, because it is already mid -September, in fact, it will pass quickly in the third quarter. Looking forward.

Zhang Chao: Recently, some companies have announced the preview of the third quarter, and there will be some three -quarter previews in the third quarter. From the current data, it is very good.

On the whole, the reason for the good in the third quarter is our previous logic. On the one hand, it was affected by public health incidents in the second quarter, and some delivery would move to the third quarter. On the other hand, everyone has fully recognized and prepared for the uncertainty of public health incidents, and it will earn some four quarters of the four quarters to the third quarter to produce and deliver. Generally, it will cause better in the third quarter.

Of course, now, in the third quarter, some accidents have been encountered, especially in Chengdu's high -temperature electricity restrictions and public health incidents. In fact, from the micro level, we paid attention to many military -listed companies, and it was also affected to varying degrees in Chengdu. This thing also had to admit it. And including Xi'an, Northeast, etc. In fact, in the third quarter, there is still the effect of public health incidents, but it must be relatively lower than the impact in the second quarter. We still maintain a better point of view in the third quarter of this year.

From the perspective of the central reporting growth rate, the probably profit growth rate of the military industry in the first half of the year was 17%-18%, and it may be lower in the second quarter. I think the overall growth rate may be 25%-26%or even higher in the third quarter. For individual companies, especially in the past, titanium alloy, high -temperature alloy and other sectors affected by upstream price increases may be due to the decline in upstream nickel and cobalt prices. This part of the company may have a higher performance growth rate of some forged companies. Like the OEM, it may still be relatively balanced. In this way, it will definitely be better than one or two quarters.

6 Untax is the development trend of the industry

Ai Xiaojun: Recently, the investment of drones is also very concerned. Please share some industrial chains related to the drone.

Zhang Chao: Okay, let me briefly analyze it.

First of all, from the perspective of large industrial logic, unmannedization is definitely a industrial trend, whether it is civilian or military. In the military field, in fact, whether it is an airplane or the ground, or some ships or boats, it is now the development trend of some people to no one, from mechanization to information and intelligence, so there is no problem in industrial trends.

The industrial trend that affects military use comes from the transformation of our combat method, because unmanned combat is relatively low in cost after all, and does not involve personnel damage. Whether we are listed or non -listed companies every day, we have come into contact with a large number of companies that do drones and unmanned vehicles. From a micro level, you can also see that their development in recent years has been very good. For a few examples, this may not be limited to drones or are not limited to the Air Force. For example, the Chinese drone of the aviation industry group that we has already been listed. From its performance growth rate, it has obtained in recent years. It has a good growth rate.

From a micro level, whether your end customers are military trade, or domestic military and public security, in fact, unmanned equipment is an industrial trend. We see some declaration materials, such as making unmanned vehicles or unmanned ground equipment, and its growth rate is OK. There are also some of the target machines, it is also a form of drone, and there are many target planes. Therefore, unmanned equipment and drones have made great progress in these years.

But maybe drones now, its overall scale and market are still difficult to compare with human machines. For example, the scale of the OEM can be compared. It is also a fighter, like Shen Fei, which may be three to four four billion, but like a rainbow, like a drone under the space electronics, it may be 1 billion and 2 billion. So now the market is relatively small, the volume of drones is relatively small.

On the other hand, its penetration rate must be gradually increasing, which is a trend. Because its market is still relatively small, as far as companies in the drone industry chain are concerned, what we can see in the capital market is relatively not too much, and generally speaking, the volume is not large. Its penetration rate is also increasing. Around the related companies in the drone industry chain, whether it is manufacturing, related aviation, electromechanical systems, or engine repair, it will grow rapidly.

We can also see that in fact, many companies are looking forward to the layout of drones, no matter what business it does. So in fact, everyone understands this industry trend, and now it is also cut in from different fields.

7 The special nature of the military industry research and investment

Ai Xiaojun: In the past three years, military industry has a valuation switching market in the fourth quarter. The Super President also specially came out. Next year, 2023 is the first year of the production capacity of the military industry. The first year of production capacity may be All industry. The growth rate of industry performance is actually a positive stimulus. Therefore, the investment opportunities in the military industry from the fourth quarter or current point to the end of the year are still worthy of everyone's attention and grasp.

Zhang Chao: In fact, I think the industrial trend and industry trend of the military industry are undoubted. It is clear whether it is investment or really doing things on the front line of military industrial enterprises. But because we are in the capital market after all, the capital market will relatively pay attention to some high -frequency data. On the one hand, the military industry lacks high -frequency data. On the other hand, I think that the excessive attention of the high -frequency data of the military industry will have a little opportunism, and it is not in line with the development characteristics and laws of the military industry.

If it is only because of the impact of a moment, or a quarter, or even half a year, it has a negative or negative judgment on an industry. I think this is an inappropriate investment logic for the military industry. Because the military industry is from demand, as long as my needs have not changed, in fact, other changes may be relatively not so important.

So this is why I sometimes feel that doing analysis and vocalization for some short -term things seems to be not the core logic. Because the core logic is actually the avenue. I also hope that new and old friends can give the military industry and military enterprises more time and patience.

Ai Xiaojun: Yes, Chao always talks about our long -term attention or continuously tracking people in the military industry industry. The capital market is indeed like this, and there are more factors that may affect. This is also a purpose we often invite professionals and investors to communicate.

But it is indeed far -reached, because there are too many factors that have received daily investment, and our investors have some pressure. In the process of investment, more institutional investors will analyze the information from many aspects to make a comprehensive judgment. I think the more than the factors of this fundamental face and transaction, the more fully communicated with everyone. In fact, it is more conducive to investors to make investment decisions. This is also the purpose of our communication.

If you are interested in the military industry, you can pay attention to the military industry ETF (512660).

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