The market for military products is promising (fig)

Company's products to military-oriented, and the need for national defense to determine the stability of the military market growth. The company is expected to get higher valuations if it encounters specific events that lead to increased certainty in the development of civilian markets. Considering the future growth prospects and risks of the company and the safety margin of the company's share price, we maintain the "overweight" rating of the company.　　The target price is 13.44 yuan. The particularity and importance of the national defense construction make the defense expenditure not fluctuate greatly because of the economic fluctuation. China's current national defense construction has decided that the future national defense construction investment will still maintain a high growth. We expect countries in aerospace, military electronics and other fields to invest in the next 5-10 years will be expected to achieve a composite growth rate of 20%.　　And the company as one of the most important suppliers, its real growth rate is expected to exceed the industry average of 25%. As a veteran military enterprise, in the process of cutting into the civil market is also facing a certain difficulty, but the company's expansion in the civil market has begun to pay off, the 2010 civilian revenue share has been close to 20%.　　A smaller base means that it is likely to achieve faster growth, with the prospect of a composite growth of 50% in the next two years and a further increase in the share of gross income. At present, the company through the cooperation with CNPC's enterprises, the joint declaration of the State "energy network", to obtain a production license and obtain the certification of PetroChina.　　This is expected to mobilize the enthusiasm of PetroChina subordinate enterprises, for the company's oil and electrical products market development to create better conditions. We estimate that the company 2010-2012 EPS is 0.42 yuan, 0.53 yuan and 0.66 yuan respectively. The current industry mainstream company 2010 average PE is about 38 times times. Taking into account the company's relatively slow growth rate, to give the company 2010 32 times times Reasonable PE, a reasonable price of 13.44 yuan.