Defense industry: "Asia-Pacific 6c" communications satellite successfully launched, focusing on the theme of national defense information.

Market review: This week, the CITIC Defense Industry Index rose or fell -1.21 percent, losing the market, ranking 27th among the 29 first-tier sectors. In the three-tier defense industry, aviation, aerospace, weapons and other military industries all fell, up and down -0.62 per cent, -0.99 per cent, -3.51 per cent and -1.38 per cent, respectively. my country successfully launched the "Asia-Pacific 6C" communications satellite: According to the People's Liberation Army Daily, at 0:06 on May 4, my country successfully launched the "Asia-Pacific 6C" communications satellite with a Long March 3B carrier rocket at the Xichang Satellite Launch Center. Enter the scheduled orbit. The "Asia-Pacific 6C" communications satellite user is Hong Kong Asia-Pacific Communications Satellite Co., Ltd., which is mainly used for regional television broadcasting, communications, Internet, multimedia and other services, and can provide services for China, Mongolia, the Asia-Pacific region, and the Indochina Peninsula. In addition, according to the relevant information on the website of the State Administration of Science, Technology and Industry for National Defense, Fengyun IV A was officially put into operation on May 1 and began to provide satellite data and products to more than 70 countries and regions around the world and 2500 domestic users. We believe that: First, China's national defense informatization is still in its infancy, and the overall situation is in the process of transformation. With the promulgation of the Central Military Commission's "Thirteenth Five-Year Plan for Army Construction and Development", the demand for national defense informatization construction has increased. It is the focus of my country's national defense investment, and the overall fundamentals of the national defense informatization sector are improving. Second, "integration of information systems, informatization of weapons and equipment, weaponization of information equipment, and modernization of information infrastructure" have become the strategic direction of the development of my country's national defense industry. Satellite communications, as the foundation and important part of national defense informatization, will be my country's national defense investment. The focus of the follow-up military satellite communication targets is expected to usher in priority accelerated development, and performance growth is still expected. We recommend focusing on the satellite communications-related targets in the national defense information sector: China Satellite, Guorui Technology, and Four Genesis Electronics.

China's J -20 has entered the era of automatic assembly and built its fuselage by producing cars. According to Sina Military's report on May 5, FC-31 has applied a series of new technologies in its research and production. The first is to apply assembly simulation technology, the second is to speed up the production of parts, and the third is to adopt a large number of new technologies such as digital detection, efficient numerical control processing, full-automatic hole making, flexible automatic docking of large parts, etc. In this production process, the traditional manual lifting and docking is replaced by a robot arm and a large automatic turntable, the manual calibration of positioning and assembly accuracy is replaced by an automatic high-precision GPS positioning system and laser tracker, the manual drilling assembly is replaced by an automatic drilling machine, and the manual monitoring of accuracy after assembly is replaced by digital detection and advanced data processing software, which can be compared with the original 3-dimensional model. This is equivalent to saying that the method of producing cars is being used to automatically produce the fuselage of the fifth-generation fighter. In addition, according to the Global Times, on May 5, an improved Z-18 helicopter landed on the deck of the first domestic aircraft carrier, and then the helicopter took off and left. This is the first time that a domestic aircraft carrier has taken off and landed. We believe that: First, my country's military aircraft demand is strong. my country's air force equipment is currently in a period of upgrading. There is a large gap between the proportion of third and fourth generation fighters and the United States, and the demand for military aircraft is strong. Second, with the acceleration of the construction progress of my country's first aircraft carrier, the demand for carrier-based aircraft has increased. Referring to past American experience, the fourth-generation medium-sized fighter is more suitable as my country's next-generation aircraft carrier, and FC-31 is expected to become my country's next-generation aircraft carrier. Based on the aircraft, it has brought performance growth to fighter manufacturers. Therefore, we recommend paying attention to the fighter manufacturing industry chain: China Airlines Shenfei, China Airlines Electrical and Mechanical, Aviation Power, China Airlines Electronics.

Investment advice: this week the overall decline in the military sector, the market gradually digested the first quarter report good, there is a short-term decline, but in the long run, the fundamentals of the military sector continued to improve. China's national defense information is still in the initial stage, the whole is in the process of transformation, satellite communications as the basis and important part of national defense information, the future is expected to usher in priority accelerated development, it is recommended to pay attention to the national defense information in the communications satellite-related targets: China Satellite, Guorui Technology, Four-creation Electronics. With the upgrading of China's military aircraft and carrier-based aircraft supporting demand increases, it is recommended to pay attention to the fighter manufacturing industry chain: China Airlines Shenfei, China Airlines Electrical and Mechanical, Aviation Power, China Airlines Electronics. The generalization, serialization and combination of our army's equipment have been fully launched. Combined with China's multiple policy incentives, we continue to propose three main investment lines in the medium and long term: first, to benefit from the upgrading of national defense weapons and equipment, including aerospace powers (aerospace electrical appliances, aerospace electronics), ocean going navy (China heavy industry, China electric power) and strategic air force (China aviation aircraft, China aviation Shen Fei, China direct shares, China aviation electromechanical). Second, benefit from the research institute restructuring and mixed reform and other policies to boost the target, including aerospace electromechanical, optoelectronic shares, Guorui Technology, four-creation electronics. Third, the endogenous growth of solid, low valuation of the people to join the military targets, including Tianyin Electrical and Mechanical, Aviation Jin Technology, new research shares.

Risk Warning: The production progress of military aircraft is less than expected, the equipment is less than expected, and the systemic risk.