Military ETFs rose sharply

Edited by: Xiao Ruidong

On Wednesday (February 7), A-shares continued to rebound, the market atmosphere continued to heat up, and the turnover exceeded one trillion for the first time since November 21, 2023. The Shanghai Composite Index rose more than 1% to regain 2,800 points, the ChiNext Index rose more than 2%, and the STAR 100 rose more than 5%.

The market turnover was 1,033.3 billion yuan, and the actual net purchase of northbound funds was 1.684 billion yuan, a net purchase for 7 consecutive days.

The military ETF (512660) rose 4.93%, and many constituent stocks rose to the limit

[Analysis of the reasons for the rise] the early stage of the plate overfell and ushered in a low-level rebound, the industry performance forecast landing orders were gradually cashed in, and the directors, supervisors and senior executives increased their holdings + repurchases to boost market confidence

Since 2023, the main reason for the continuous adjustment of the sector may be due to the impact of medium-term adjustment and personnel changes, and the issuance of orders in the military industry has been delayed.

A number of listed companies clearly mentioned in their 2023 semi-annual reports that factors such as "phased adjustment of downstream customer procurement plans", "postponement of equipment procurement plans", "delays in customer contract signing" and "cyclical fluctuations in the market" had an impact on revenue and profit during the reporting period.

As of February 7, the PE valuation of the CSI Military Index was 46 times, located at the historical 0.81% percentile, and it ushered in a rebound today after a sharp adjustment of the overfall.

Source: Wind

Last week's performance forecast landed, and pessimistic expectations were released. Although the industry has declined significantly due to the impact of the previous year's performance forecast and the overall market style, some companies, such as Huaqin Technology, have recently issued announcements on signing new contracts, and the certainty of future performance growth has been strengthened.

In addition, on February 3, AVIC Optoelectronics and AVIC Heavy Machinery announced plans to increase their shareholdings by some directors, supervisors and senior executives, and since 2023, a number of military companies have announced the repurchase of shares. The increase in shareholdings and share repurchases by directors, supervisors and senior executives of listed companies demonstrate confidence in the company's future development, which is conducive to boosting investor sentiment.

【Outlook】A new round of reform of central enterprises is good for value revaluation

In 2023, the budget of the Continental Army will grow by 7.2% year-on-year, with a year-on-year growth rate of 0.1 percentage points, and the growth rate has maintained month-on-month growth for three consecutive years.

Source: Wind, Founder Securities

Medium-term adjustments and important personnel adjustments will be gradually implemented in the fourth quarter of 2023. Starting from the fourth quarter of 2023, corporate orders will gradually recover, and some listed companies in the national defense and military industry will disclose that they have received orders, and the prosperity of the military industry will gradually rise. In 2024, we will enter the second half of the "14th Five-Year Plan", some disturbance factors will be gradually eliminated, and the military industry is expected to enter an accelerated period of modernization of weapons and equipment.

On January 29, at the meeting on the assessment and distribution of central enterprises and local SASAC, the State-owned Assets Supervision and Administration Commission of the State Council said that on the basis of the early pilot exploration and accumulation of experience, the market value management assessment of listed companies will be comprehensively launched. On January 24, the State-owned Assets Supervision and Administration Commission (SASAC) announced that it would further study the inclusion of market value management in the performance appraisal of the heads of central enterprises, which once again sent a strong signal to the outside world

The event has long been beneficial to a number of military central enterprises, military central enterprises, as a number of modern industrial chain "chain length" with high asset quality, high technical barriers and strong research and development capabilities, is expected to continue to improve quality and efficiency with the implementation of policies in the later stage, achieve double improvement in performance valuation, and be optimistic about the revaluation of the value of military central state-owned enterprises.

Risk Warning:

This quick review has strived to be objective and fair in the content of the report, but does not make any guarantee for the accuracy and completeness of the information, and the views, conclusions and recommendations in this article are for reference only, and the relevant views do not represent any investment advice or commitment. The short-term rise and fall of an industry or sector is only used as an auxiliary material for market analysis, and is for reference only and does not constitute investment advice or commitment.

The mainland fund has been in operation for a relatively short period of time and does not reflect all stages of the development of the stock market. The fund manager undertakes to manage and use the fund assets in good faith, diligence and responsibility, but does not guarantee that the fund will be profitable, nor does it guarantee a minimum return. Past performance and net worth of a fund are not indicative of future performance. The fund manager reminds investors of the principle of "buyer's responsibility" in fund investment, and after making investment decisions, investors shall bear the investment risks caused by changes in the operation status of the fund and the net value of the fund. Funds are risky, and you should choose a fund that matches your risk identification ability and tolerance during the purchase process, and you need to be cautious in investing.

Investors should fully understand the difference between regular and fixed investment of funds and savings methods such as small deposits and withdrawals. Regular investment is a simple and easy way to guide investors to make long-term investments and average investment costs. However, regular investment does not avoid the inherent risks of fund investment, does not guarantee investors to obtain returns, and is not an equivalent financial management method to replace savings.

National Business Daily