"Military industry depth report two" 2015 Military Main Line one: Weapon equipment upgrade

I Investment I Investment (No.: ITOUZI8) "VIP Club" aims to build a professional industry chain research community. Through the pooling of industry experts, industry analysts, PE/VC, listed companies and industrial executives and professional investors, we conduct an in-depth, comprehensive and forward-looking industrial chain research to explore investment opportunities in equity and stock markets. West Point A (I Investment Research Institute-the chief researcher of military Beidou research team, I investment VIP member)

2015 intends to continue the 2014 years did not come and research in the military subdivision industry, including the 15 strategy, unmanned aerial vehicles, large aircraft, aircraft carriers, military radar, infrared technology, the Civil Army, hospital restructuring, asset injection, general aviation, Beidou navigation, helicopters, aero-engine and other special research. This part will form a military series, named "West Point Military Series", this article is the series of two.

Replay the 2013, 2014 military stock market, in-depth analysis of the military stock of the macro background, re-comb the military industry and economic cycle of the relationship between the past, although wonderful, but we are more concerned about the future of military stocks. Standing in the forefront of the military industry reform, I firmly believe that the long bull market of military stocks will continue, the military will continue to the wind, the past two years is just a warm-up and rehearsal, more positive factors will be cashed in the future. The focus of military construction has shifted to the sea and Air Force, a series of major science and technology projects, such as aero-engine, Beidou navigation, military satellite communications, Haiphong sonar system, national information security will usher in a major development opportunities, these core areas will continue to receive national policy and financial support, corresponding to the capital market, are in the military unit of the World in the wind handspike.

For the 2015 military stocks of risk judgment, my view is the year-end years to digest valuation and wait for policy performance landed, Spring basic digestion of all kinds of risk factors, with a re-market basis conditions. for the opportunity of 2015 military stocks, I think to seize the "three main lines", along the three main lines to find out the context of military stocks: one, from the perspective of the upgrading of China's weapons equipment, the Navy, Air Force and aviation engine three areas of investment opportunities; Secondly, from the perspective of physical reform, We are optimistic about the two opportunities of asset injection and the reform of scientific research institutes. Thirdly, from the long-term trend of military information, we are optimistic about four investment opportunities in Beidou navigation, advanced radar, satellite communication and underwater sonar.

Optimistic about the long-term stable growth of glarun technology under the dual main industry of microwave and radar, as well as the forecast of the transformation and injection of CLP 14.

One, 2015 military main Line one: Weapon equipment upgrade

From the 80 's to the beginning of this century, in order to support the economic construction, the investment of National defense science and technology slowed down, demanded the army build endure, fully support the economic construction, until the late 90, "995 project" after the inflection point, established the National Defense Modernization Construction "three steps" Strategic concept: To lay a solid foundation before 2010, 2020 years ago, the basic realization of mechanization and the construction of information technology has made significant progress, the 21st century century to achieve the basic national defense and military modernization. Focus on the 2020 strategic objectives, is currently in the key 10 years of upgrading of weapons and equipment, to 2020 will form a third to the main body, the fourth backbone of the weapons and equipment system. vigorously develop the naval and Air Force equipment, strengthen the military information construction, through the reorganization of assets and institutional reform to promote the re-level of the system, for the new generation of weapons and equipment to accelerate the upgrade to provide driving force.

In recent years, China's strategic focus shifted from inland to the sea, directly brought about the change of the demand of weapons and equipment, the naval ocean combat Capability and the Air Force's strategic delivery ability have become the current construction emphases, and its iconic equipment is the aircraft carrier and the strategic transport plane respectively. 18 plenary resolution proposed, adjusted to improve the arms ratio, which also contains the further increase in the proportion of the sea and Air Force content.

Nowadays, the task of air power in China is changing from territorial air defense type to offensive and defensive type. Long-range combat, remote delivery, remote early warning capability is the focus of construction. In the structure of the existing military aircraft, the Bombers, early warning machines, transport planes, refueling machines, trainer aircraft and other auxiliary combat planes accounted for a relatively large gap in developed countries, and fighter jets are more air-superior fighter, multi-purpose performance is poor. Therefore, considering the development of the new model, it is expected that in the next 5 years, the production of three-generation semi-multipurpose fighter aircraft (fighter -10b, fighter -16), transport aircraft (transport-9, transport-20), early-warning machines (air-200, air-2000, air-500) and EW high-tech machines will be greatly increased.

To develop the Navy and Air Force, aviation power is one of the most critical, whether it is the Naval air Strike Force, early warning detection and refueling force, or air Force's various types of air combat and support forces, can not do without a common thing, that is-aero-engine, which is the heart of the aircraft to provide flight power, is precisely the core of the most critical one, but also China's current stage of the most embarrassing piece of a short board. This is an extremely complex technology, in the U.S. National Key Technology program, the aero-engine technology is described as "a technology is very strong to make the novice difficult to enter the field, it requires the country to fully protect and use the results in this field, long-term data and experience accumulation, as well as the country's substantial investment". At present, only the United States, Russia, Britain, France, China and several countries independently master the manufacturing technology of large thrust aero-engine, Japan and Sweden can master the manufacturing technology of three-generation fighter aircraft, but do not have the independent research and manufacturing capacity of aero-engine.

Due to the extremely high technical difficulty, known as the "manufacturing crown jewel." After a century of development, aero-engines have evolved from the initial piston propellers to the latest turbo-fan engines, and the technology, materials, processes and control requirements are increasingly high, and their technical difficulty is even higher than that of space launches and nuclear weapons development, becoming an important symbol of national technology, industry, national defense and economic strength. For the topic of "weapon equipment upgrade", in addition to the need for strong development of the sea and Air Force, this short board must be changed from policy, financial and physical aspects and strong support in order to make a breakthrough, or will always be stuck in the most critical link. Therefore, this plate is one of the three major investment opportunities for weapons and equipment.

1, naval equipment opportunities from the aircraft carrier formation of large-scale project and construction

After more than more than 60 years of development, the Chinese navy has preliminarily built a modern naval warfare capability with multi-class combination and dual warfare means, but the ability of ocean-going warfare is obviously insufficient, especially the water quantity of large surface ships is relatively small. Aircraft carriers, the United States has 10 "Nick" class nuclear-powered aircraft carrier, the most new "Ford" class aircraft carrier is expected to serve in 2015 years, Japan has two displacement 13,500 tons of "day" class helicopter mothership, a displacement of 24,000 tons, can be equipped with F-35B 22DDH helicopter aircraft carrier, China has just had the first aircraft carrier platform "Liaoning ship", and does not have a complete combat capability. Strengthening the capability of ocean-going warfare is a strategic task of China's naval modernization, and will need at least three aircraft carrier battle groups in the future, thus promoting the development of aircraft carriers, large surface warships, ship-borne aircraft and related ancillary equipment.

The total construction cost of a "Nick" class carrier battle Group is nearly $30 billion, and the life cycle costs more than $100 billion. Although our country's aircraft carrier is still the conventional power, and the number of aircraft is more than the "Knicks" class carrier less than half, but an aircraft carrier formation of the full life cost in the hundreds of billions of dollars, will be in the industry chain of the relevant enterprises to bring obvious pull.

2, Air Force equipment is the opportunity to upgrade fighter aircraft

According to the latest statistics of Flight International, the total number of active aircraft in China is 2731, including 1455 fighter jets, 186 aircraft, 708 armed helicopters, 329 aircraft trainer and 53 special mission aircraft. In terms of fleet size, after the United States and Russia, ranked third in the world. But the structure of fighter plane is obviously deficient: first, the number of support aircraft and helicopters is seriously inadequate, the second is that fighter aircraft accounted for more than three generations is still low.

China's active fighters, the three-generation model mainly includes the Russian imports of the Su-27 series, as well as the domestic 10, 11, the total amount of about 500, accounting for nearly 40% of the total fighter aircraft, 7 of the number of fighters, the ratio of 107; and nearly 7% second-generation machines (strong-700, fighter-5, Fighter -8) is still in service, accounting for about half of the total number of active fighters. Compared with the developed countries, the United States and Russia's main aircraft are almost all three or four generations of fighter jets, Britain, France, Japan, the total number of fighter jets is less than China, but its three-generation aircraft accounted for more than 70%. According to our Army's 2020 three-generation equipment as the main body, four generations of equipment as the backbone of the strategic goal, the next decade of three-generation machine demand is huge, according to the public information forecast, scale about 1000 or more.

A variety of support aircraft (early warning machines, refueling machines, transport aircraft, etc.), especially based on large-scale transport platform support aircraft demand gap is larger. Because the domestic still does not have the ability to develop and produce large-scale transport aircraft, air transport power to domestic transport 8 medium-sized transport, large-scale transport tasks can only rely on imports from Russia, more than 10-76. According to the "International flight" statistics, the United States has a number of military transport aircraft about 1794, accounting for about 35% of the global total, 758 of various types of special aircraft, accounting for 41% of the global total. The number of transport and special aircraft in Russia is 336 and 74 respectively. The number of transport and special aircraft in our country is 185 and 53 respectively. It is expected that over the next ten years our country will need more than 400 support aircraft, of which a large transport platform needs at least 100.

3, aviation engine see "Two machine" special time and intensity

The aviation engine industry is highly monopolized, and currently only three companies in the world, ro-Ro, GE and Whitney, have the capacity to produce large turbo aero engines, and three share more than 75% of the world market. Aero-engine is a part of national security strategy and economic strategy, is the result of long-term investment and long-term accumulation, the United States and Britain have long been the aviation engine as a priority industry, and the external strict blockade policy.

In recent years, China's military aero-engine technology has made some significant progress. The "Taihang" turbofan engine, which was formed in 2005, was developed entirely domestically, representing the highest level of aero-engine manufacturing in China at present. However, "Taihang" core machine technology still stems from the United States and France jointly developed CFM-56, and after the design of stereotypes and not widely used in mass production of military models, and domestic large passenger aircraft at the same time the large-scale transport aircraft, there is news that the original will also use the Russian-made D-30 engine.

In order to improve the development level and speed up the development of aero-engine, from 2012 our country began brewing the aviation engine into the national major special, the national industry and fiscal policy to the aviation engine industry to be necessary tilt, from the national level to give the aviation engine industry long-term, stable support. In the second half of 2014, the relevant departments also began brewing the Industrial group as a two, of which the aviation engine manufacturing sector will set up a new independent company-China Aviation engine group. The spin-off plan aims to break the bottleneck of the development of the engine, which restricts China's large passenger aircraft and large-scale transport aircraft, and then the Chinese aero engine and machine will be developed separately to break the old aviation industry model of "one factory one model".

For the "Two-machine special" (that is, the national aviation engine and gas turbine "two machines" technology major Special) time node, and will not and when the establishment of China Aero-engine group, we only wait quietly, but, for the engine industry chain of huge investment opportunities, anyway is worth our layout and look forward to.

Related subject: Hongdu aviation (SH600316)  Electronics (SH600372) China Heavy Industry (SH601989) Glarun Technology (SH600562) (Source: Snowball)

"Military industry depth report two" 2015 Military Main Line one: Weapon equipment upgrade