Across the mountains and seas, a large Chinese plane flew onto the "Silk Road in the Air".

At the recently concluded East Expo, Brunei signed a purchase order of more than US $2 billion for 30 large Chinese aircraft, which is also the largest trade order so far at the East Expo, once again stunning the market for large Chinese aircraft.

China's large aircraft is a commercial aircraft independently developed and manufactured. At present, it has three types of aircraft, C919, ARJ21-700 and CR929 under research. What are the investment opportunities in the domestic large aircraft industry chain?

From Southeast Asia, where large planes fly to, to the Middle East, where local tyrants gather, the recent "the belt and road initiative" investment enthusiasm has been high. Not only local tyrants from the Middle East have come to China to invest, but also Chinese enterprises have gone out to sea and landed in Saudi Arabia.

Big Plane on "Air Silk Road"

Good news came from the just-concluded 20th China-ASEAN Expo and China-ASEAN Business and Investment Summit.

At this event, China's intelligent equipment, green home appliances, green home building materials, and lighting technology products are favored by ASEAN buyers. Among them, Brunei signed a purchase order for 30 large Chinese aircraft, worth 2 billion US dollars.

It is reported that the order has also become the largest trade order so far.

The order signed by Brunei, China's large aircraft, is one of the positive results of the Belt and Road Initiative.

The "Belt and Road" initiative is a major strategy proposed by China. It aims to promote trade and investment liberalization and facilitation by strengthening economic cooperation with countries along the route, and achieve common development and prosperity. Therefore, the implementation of the "Belt and Road" initiative also provides strong support for the development of China's large aircraft industry.

In the field of large aircraft, Chinese companies have continuously improved their own strength through technology introduction and innovation, and have gradually become one of the world's leading large aircraft manufacturers.

At present, China has independently developed and manufactured commercial aircraft, including the C919, ARJ21-700 and CR929, which have been put into operation.

While making a series of achievements, China has also actively participated in the international aviation market competition and strived to expand overseas markets. The order of China's large aircraft in Brunei is an important progress made by Chinese enterprises in the international market.

At the same time, the large aircraft order signed by Brunei is another important achievement under the Belt and Road Initiative, which is of great significance for promoting economic and trade exchanges between China and neighboring countries.

Breaking the duopoly pattern, what are the investment opportunities in the industrial chain?

Why is it called a "big plane"?

In the civil field, it usually refers to an aircraft with a take-off weight of about 100 tons and carrying more than 150 passengers. Its manufacturing directly reflects the level of a country's industrial system.

China's research on large aircraft can be traced back to the 1970 s. During that period, China began to explore and develop large aircraft.

In August 1970, China began to develop the Yun 10 model, a trunk airliner with more than 150 seats.

however, due to the large investment in research and development and the lack of conditions for large-scale commercial operation, the 0.538 billion-yuan transport 10 plan was terminated in 1986.

Since then, China has also cooperated with foreign-funded enterprises on large aircraft projects, but due to various reasons, it has not been successful, resulting in a stagnation of large aircraft projects.

Since the 21st century, China's scientific and technological level has made great progress in various fields, and China's aviation industry has begun to start again.

In 2006, the major special project of large aircraft was identified as one of the 16 major science and technology projects, and was written into the "National Medium and Long-term Science and Technology Development Plan Outline (2006-2020)". The determination of this special project marks a new stage in the development of China's large aircraft.

In 2008, COMAC was established to implement a special medium and large passenger aircraft project. Subsequently, first domestic large aircraft was named C919.

In the following years, China continued to increase its investment in the field of large aircraft and gradually achieved technological breakthroughs.

The C919 successfully made its first flight on May 5, 2017, and received a type certificate from the Civil Aviation Administration of China on September 29, 2022. The delivery of the first aircraft was completed on December 9 of the same year. On May 28, 2023, the C919 completed its first commercial flight.

In addition, China has independently developed and manufactured a regional jet ARJ21-700, which was officially put into commercial operation on June 28, 2016;

China and Russia also jointly developed a wide-body passenger aircraft CR929, is still in the development stage.

Nowadays, China's large aircraft has gradually been recognized by the international market. C919 and ARJ21-700 are also constantly expanding the international market, and gradually become one of the representatives of China's large aircraft, and occupy a place in the international competition.

at the plenary meeting of the Pujiang innovation forum in 2023, the chairman of commercial aircraft company of China limited disclosed that up to now, commercial aircraft of China has delivered 2 C919 and the order volume has reached 1061. the subsequent development of the aircraft includes shortened to lengthened, covering 130 to 240 seats.

What are the investment opportunities in the industry chain?

As domestic large aircraft go overseas, investment opportunities in the domestic large aircraft industry chain have also attracted much attention. Through the development of C919 and other large passenger aircraft, the innovation chain, value chain and industrial chain of China's commercial aircraft industry have been greatly expanded and extended, which has led to technological breakthroughs in new materials, modern manufacturing, electronic information and other fields.

At present, the domestic suppliers of C919 parts are mainly aerospace and military system-owned enterprises, of which the value of the body part accounts for the largest proportion, and the localization rate is also the highest.

among them, the relevant concept stocks in the field of main engine factory include avic shenfei, avic xifei (000768.SZ), hongdu aviation (600316.SH), zhongzhi shares (600038.SH), etc.

the concept stocks in the power plant field include aviation power (600893.SH), (000738.SZ) and aviation technology (600391.SH);

the airborne system concept unit includes avic electronics (600372.SH), avic optoelectronics (002179.SZ), aerospace electrical appliances, jianghang equipment (688586.SH), boyun new materials (002297.SZ);

Parts processing concept stocks include AVIC Heavy Machinery (600765.SH), AVIC Optoelectronics (002179.SZ), and Aloda;

concept stocks in the field of new materials include western superconducting (688122.SH), baoti shares (600456.SH), china aviation high-tech (600862.SH), guangwei compound material (300699.SZ), Chujiang new material (002171.SZ), Fushun special steel (600399.SH), steel research (300034.SZ), etc.

Through independent innovation and development, the domestic large aircraft industry chain is gradually improving and developing. At the same time, it has also led to the innovation of the civil aviation industry system and mechanism, leveraging a new trillion blue ocean.

according to the annual report on China's civil aircraft market forecast (2021-2040) released by the aviation industry development center, from 2021 to 2040, China will need to supplement 7646 civil aircraft to meet the demand for traffic growth and replacement of retired aircraft. According to the representative models of various types of passenger aircraft, China's civil aviation passenger aircraft market space in 2021-2040 can reach 6.75 trillion yuan.

Summary

From Southeast Asia to the Middle East, the "Belt and Road" is crossing mountains and seas. In expanding economic and trade cooperation with countries along the route, it not only provides new opportunities for domestic and foreign industrial cooperation, but also effectively promotes trade and investment in countries along the route., Personnel flow, trade flow, information flow and cultural exchanges are all driven.

China's large aircraft flying on the "Sky Silk Road" is just a microcosm, and the future development of the "Belt and Road" will be even more gratifying.

Author: Li Ying