Recently, the main line of the market is not clear, and the effect of making money is not good. The market has been looking for a highly prosperous industry with a definite performance side. Some market participants pointed out that the military industry sector has been adjusted in the past two months, which may have the significance of re-opening investment.
At the same time, Guosheng Securities analyzed that the national defense and military industry will enter a high-prosperity era of "short-term/3-year outbreak, medium-term/7-year upgrade, and long-term military-to-civilian sustained development". Look at the high prosperity of the military industry from the three dimensions of short, medium and medium term.
First, short-term: the military industry has entered a 3-year period of explosive growth
Military orders as a leading indicator of prosperity will be broken, the market questions, it is expected that military orders in November and December or will be intensively released. The core questioning point of the current market about the military industry is that the substantial growth of military orders in 2020 is only the result of centralized procurement in the last year of the "13th Five-Year Plan", and the high growth of the "14th Five-Year Plan" in the future is not sustainable. From the three angles of industrial trends, national defense policies, and military orders, it can be clear that the military industry will enter a period of explosive growth in the next three years.
1) Industrial trend: Before the "Thirteenth Five-Year Plan", it has always been the stage of development, finalization or small batch loading of key models of equipment in China, and by the "Fourteenth Five-Year Plan", it has entered a period when it is necessary to formally form the combat capability system of China's military through a large number of equipment, which is an inevitable trend of industrial development.
2) National Defense Policy: The "Proposal of the CPC Central Committee on Formulating the Fourteenth Five-Year Plan for National Economic and Social Development and the Long-term Goals for the 2035 Years" clearly points out: Accelerate the modernization of weapons and equipment, concentrate on independent innovation and original innovation in national defense science and technology, accelerate the development of strategic frontier subversive technologies, and accelerate the upgrading of weapons and equipment and the development of intelligent weapons and equipment. "Speeding up and accelerating" indicates the urgency of the construction of combat readiness, that is, equipment release.
3) Military orders: Orders are the leading indicators of the prosperity of the military industry, which is based on sales and production. In accordance with the law of the military industry to sell and set production, we expect that the "14th Five-Year Plan" weapons and equipment orders in the military industry will be released one after another from November to December, and the prosperity of the industrial chain will be fully verified. This is an important catalyst for the verification of the industry's prosperity.
Second, the medium term: 7 years of equipment upgrade period, 2027 to achieve the centennial goal of army building
The "Proposal of the Central Committee of the Communist Party of China on Formulating the 14th Five-Year Plan for National Economic and Social Development and the Long-term Goals for 2035" for the first time put forward the goal of the centenary goal of the founding of the army in 2027. At present, there is a big gap between China's weapons and equipment strength and that of the United States, and the upgrading of weapons and equipment against the United States is an important task for China's military construction, and it is also an important aspect of promoting the simultaneous improvement of China's national defense strength and economic strength. Guosheng Securities believes that in the next 7 years, China's national defense equipment will enter a period of batch construction, and it will move towards the world's first-class military national defense equipment.
Third, long-term: the military to civilian to pull hundreds of billions of trillions of civilian market, military enterprises to obtain a long-term growth momentum source
On the one hand, national defense and military technology is the source of many advanced technologies, the development of military industry is not only an important way to improve the country's scientific and technological innovation capabilities, the military to civilian is an important way to release high-end military technology and engineer dividends; on the other hand, military technology breakthroughs, followed by hundreds of billions, trillions of civilian industries. For example, large aircraft, aero engines, satellite Internet, chips, all-electric propulsion ships and other industries, which bring huge growth space to military enterprises.
Individual stock investment:
In the face of the military industry in the next 7 years of the construction period, and I will enter the military order intensive release period in November and December, under such a high certainty and high growth of the industrial trend, should be in advance of the allocation, layout. The key direction of weapons and equipment procurement in the "14th Five-Year Plan" is based on "future combat equipment" and "expendable equipment".