20230512-天风证券-国防军工2023一季报分析_黎明即起_未来方向初见端倪_19页_1mb

Defense Industry Analysis Summary

Overview

The 2023 first-quarter report analyzes the defense industry, highlighting its strong performance and high growth rates. After excluding cyclical shipbuilding components, the sector showed significant year-over-year improvements in revenue and net profit, with core companies outperforming the broader market.

Key Findings

• Industry Performance: The defense sector maintained high growth, with revenue up 136.5% and net profit up 67.8% YoY. Core companies recorded even stronger growth, with revenue up 161.7% and net profit up 202.9% YoY, indicating a shift toward higher profitability.
• Structural Divergence: Different sub-sectors showed notable variations. Upstream areas like new materials and military electronics experienced an overall increase, with sub-components like passive elements facing consolidation. Midstream aviation and engine-related activities accelerated due to capacity expansion. Downstream hosts saw mixed results, with aircraft and engines performing well, while helicopters and trainers lagged.
• Investment Opportunities: The report recommends focusing on emerging areas such as naval equipment, satellite internet, advanced engines for modern aircraft, and precision munitions. Specific stock suggestions include companies like Shaanxi Electric Co., Zhonghong Shenfei, Jiaoyan Technology, and others listed under new domains like "new quality" defense products.
• Valuation and Timing: The industry is at a low valuation percentile with reduced crowdedness of funds, making it attractive for investment. Opportunities exist to capture growth in new initiatives aligned with modernization goals.

Investment Recommendations

• Prioritized Areas:
  • (1) Naval defense supply chains.
  • (2) International or regional deployment capabilities.
  • (3) Information networks, including satellite-based services.
  • (4) Engine suppliers for advanced aircraft.
  • (5) Precision weapons and drones.
  • (6) Stable, well-performing companies.
• Supported Stocks: Companies like Hunan Xiangdian, Zhanhong Shenfei, and others are highlighted for their growth potential.

Risks

• Market volatility, delays in orders or deliveries, scope changes in equipment programs, potential setbacks in state-owned enterprise reforms, and production challenges.

Conclusion

The defense industry remains in a high-growth phase, with opportunities emerging from structural shifts and investments in next-generation capabilities. Current conditions support value-driven investments.