Event: on January 18, 2021, the company announced that a missile product of the JK series successfully completed the UAV hanging test in the shooting range, the flight technical indicators met the requirements of the outline, and the test was a complete success. According to the announcement, the missile product is an airborne ground-to-ground attack model of the JK series, and the company is steadily advancing the work of the JK series products as planned. We believe that the success of the flight test of JK series airborne missiles is a major breakthrough in the serialization of JK missiles. JK missiles with many advantages may bring high elastic growth to the company's arms trade business after the order is landed:
1) the attack UAV is in line with the future combat trend: the missile-carrying UAV can achieve "low-cost precision strike" in the war, and complete the tasks of near-air firepower suppression, enemy air defense system suppression, tactical and even strategic strike.
As a sharp weapon in the future battlefield, all countries are accelerating the development and equipment of UAV, thus increasing the demand of UAV for airborne missiles.
2) consumption attribute is expected to bring high performance flexibility of JK aircraft-borne products: airborne missiles are easy to consume, and because the UAV itself has the characteristics of low cost and no casualties, it is often damaged in the battlefield, with large configuration demand and broad space for military trade. At the same time, due to the lower unit price, the order will be more realizable after being finalized in the future. In terms of marketing and sales of JK projects, the company is currently in negotiations with customers, and we expect to bring highly flexible growth to the company's defense business in the future.
3) there are many carriers of ultra-small guided missiles not only mounted by UAV, but also can be installed on unmanned ground vehicles and unmanned surface boats, and become a sharp weapon in the future unmanned warfare. According to the announcement, in the context of the strategic transformation of the defense sector, we expect that JK missiles are expected to achieve more serialized development in the future to meet the needs of operational applications.
We believe that the successful flight test of the JK missile UAV is another major development on the product side after the finalization of the HD-1 missile, and with the promotion of the company's business negotiations with international interested customers, the arrival of arms trade orders in the future is expected. As we analyzed in our previous report, the company is experiencing a major upgrade of "0mur1Mel 10-100" leapfrog development.
1) growth stage "0 to 1": in the three major links of HD-1 and JK missile single product logic, the policy side (export project approval) and the product side (finalized) have been landed, and the arrival of military trade orders can be expected under the background of customized demand. We believe that the landing of any military trade missile order of HD-1 or JK will realize the closed loop of the "R & D-production-military trade sales" chain and lay the foundation for platform and group development. At present, the scientific research and test, production and construction, market promotion, business negotiations and other work of the two-type missile project are all advancing steadily.
2) growth stage "1 to 10": HD-1 or JK missiles become popular military trade products, sold from one country to the world. We believe that missiles are the best weapon to solve the imbalance of force between ourselves and the enemy, and the best variety in the military trade track. The performance of HD-1 surpasses the Brahmos jointly developed by India and Russia. According to India's "Economic Times", the Brahmos cruise missile regiment deployed by India at the border between China and India has a total value of nearly 650 million US dollars, and the unit price of HD-1 and the arms trade market have more room. The JK missile conforms to the future combat trend and has the demand for multi-strike scenarios, and we expect to sell it from 1 to the world.
3) growth stage "10 to 100": relying on its unique flexible mechanism of mixed reform of military state-owned enterprises, the company can constantly attract high-end military technology and talent dividends to release here, and can develop diversified weapons and equipment in a rolling and platform way. in the future, it may be built into a platform-based, group-type military industrial enterprise.
Investment suggestion: we believe that the recent continuous finalization of HD-1 and JK missiles is another new starting point for the grand blasting platform and group development strategic pattern, and the landing of airborne ground-to-ground attack missiles and other series of products will not only enrich the product line, but also accelerate the realization of the company's "0100th" growth logic.
We maintain the previous profit forecast and estimate that the homing net profit from 2020 to 2022 will be 4.52 pound 6.86 / 986 million yuan respectively, and the PE corresponding to the previous stock price will be 65kg 43max 30X. Maintain a "buy" rating.
Risk hint: the progress of military trade missile finalization and order is lower than market expectations.