Core Viewpoints - The recent geopolitical tensions, particularly the conflict between Israel and Iran, have led to significant market reactions, including a drop in U.S. futures and a surge in gold and oil prices [1][3]. Group 1: Market Performance - A total of 4,477 stocks in the A-share market declined, with only 849 stocks rising, indicating a broad market downturn [2]. - The consumer sector, both new and old, has been heavily impacted, with traditional consumption stocks like liquor continuing to decline, particularly Moutai since May 15 [2]. - The innovative drug sector showed strength but experienced a significant pullback after a brief surge, with only a few stocks like Shuyitai continuing to rise [2]. Group 2: Sector Analysis - The military industry is highlighted as a key area of focus, with stocks like AVIC Chengfei rising by 11% and Chengfei Integration hitting the daily limit, driven by ongoing geopolitical tensions and increased domestic military product reputation [3]. - The oil sector experienced a sharp increase of 14% but is viewed as having limited sustainability due to global economic fundamentals affecting oil prices [3]. - Gold remains a safe haven asset during turbulent times, with its price fluctuations reflecting ongoing global uncertainties [3]. Group 3: Market Outlook - The market is transitioning from sector rotation to a weaker overall performance, suggesting a cautious approach is necessary [4]. - There are questions regarding how to navigate the current market adjustment and which segments of the military industry may present better investment opportunities [4]. - The robotics sector has faced several months of adjustment, raising concerns about its future attractiveness and potential buying points [4]. - The innovative drug sector's recent performance raises questions about whether the current pullback is a buying opportunity or the start of a more significant adjustment [4].

Core Viewpoint - The article discusses the impact of geopolitical tensions, particularly the conflict between Israel and Iran, on various sectors in the market, highlighting significant movements in military, oil, and gold industries while noting the overall weakness in the A-share market and consumer sectors [1][3]. Group 1: Market Performance - A total of 4,477 stocks in the A-share market declined, with only 849 stocks rising, indicating a broad market downturn [2]. - The consumer sector, both new and old, is experiencing significant declines, with traditional consumption, particularly in the liquor industry, facing ongoing downward pressure [2]. - The military, oil, and gold sectors are currently the most prominent performers in the market, with military stocks showing strong gains [3]. Group 2: Sector Analysis - The military sector is highlighted as a key area of focus, with companies like AVIC Chengfei rising by 11% and Chengfei Integration hitting the daily limit, suggesting a strong interest in military stocks due to ongoing geopolitical tensions [3]. - The oil sector experienced a sharp increase of 14% but is expected to face challenges in sustaining this momentum due to global economic fundamentals [3]. - Gold is viewed as a safe haven during turbulent times, maintaining its value despite recent fluctuations [3]. Group 3: Future Outlook - The article raises questions about how to navigate the current market adjustment and which segments within the military sector may present better investment opportunities [4]. - There is skepticism regarding the long-term appeal of the robotics sector, which has seen several months of adjustment [4]. - The innovative pharmaceutical sector experienced a spike but is now facing uncertainty about whether this is a buying opportunity or the beginning of a larger correction [4].

Group 1 - The core viewpoint of the article highlights the significant growth in investment and financing activities within the Chinese aviation engine industry, particularly in 2024, where financing amounts reached 586 million yuan with 15 events, indicating an increasing demand for capital support [1][3][6] - The aviation engine industry is undergoing a transformation phase, with fluctuations in single financing amounts, which generally range from several million to several billion yuan. In 2024, the single financing amount slightly decreased to 40 million yuan but rebounded to 90 million yuan in 2025, reflecting diverse financing needs across different project scales and development stages [3][6] - The financing structure of the aviation engine industry is diverse, with a significant focus on early-stage financing, particularly angel and A-round investments, which accounted for 17 and 21 events respectively. This indicates strong investor interest in startups and confidence in the industry's long-term development [6][12] Group 2 - The majority of financing activities are concentrated in technology research and production, with a notable emphasis on aviation engine components and research. From 2023 to 2025, the main financing events in the industry reflect this trend [7][10] - Mergers and acquisitions in the aviation engine industry primarily focus on horizontal integration, with over 45% of events categorized as such. This strategy aims to enhance market share and competitive advantage through collaboration among similar enterprises [12][16] - Recent investment activities by representative companies in the aviation engine sector indicate a trend towards integrating technology and capital, which can enhance operational efficiency and market competitiveness [16][18]

Investment Rating - The report rates the defense and military industry as "Overweight," indicating a positive outlook for the sector compared to the overall market performance [2][29]. Core Insights - The defense and military sector has shown resilience, with the Shenwan Defense and Military Index rising by 2.13%, outperforming major indices such as the Shanghai Composite Index, which fell by 0.03% [3][7]. - The report anticipates a growth cycle for Chinese military trade, driven by increased international recognition of Chinese military products amid geopolitical tensions [6]. - The fundamental changes in the military sector are expected to solidify the upward trajectory of the industry, particularly benefiting companies involved in consumable weapons as the military modernization efforts intensify [6]. - The report suggests increasing attention to the military sector, highlighting specific areas such as precision-guided weapons, underwater capabilities, and advancements in AI and robotics [6]. Market Review - The Shenwan Defense and Military Index outperformed the market, ranking third among 31 sectors with a 2.13% increase [3][7]. - Notable stock performances included Rongfa Nuclear Power, which surged by 31.79%, and Haige Communication, which rose by 16.34% [14][15]. - Conversely, stocks like Lijun Co. and Changchun Yidong experienced significant declines, with Lijun Co. dropping by 21.89% [15]. Valuation Changes - The current PE-TTM for the Shenwan Defense and Military sector stands at 74.13, indicating a high valuation relative to historical levels [15][21]. - The report notes a divergence in valuations among sub-sectors, with aerospace and aviation equipment showing relatively high PE valuations since 2020 [15][19]. Key Valuation Metrics - The report provides a detailed valuation table for key companies in the defense sector, indicating projected net profits and PE ratios for the years 2024 to 2027 [21][24].

Investment Rating - The report initiates coverage with a "Buy" rating for the company [12]. Core Viewpoints - The company is a core asset of AECC and has established a comprehensive industrial chain covering various aviation component categories, demonstrating strong competitive advantages in both domestic and international markets [4][10]. - The company has a significant growth potential in the domestic market driven by military aircraft upgrades and maintenance demands, with a projected market space of approximately 792 billion yuan for aviation engine components over the next five years [8][51]. - The company has maintained strong customer loyalty through over 20 years of collaboration with leading international aerospace firms, positioning itself for stable growth in its foreign trade business [8][62]. - The company is strategically positioned to benefit from the domestic production of commercial aircraft engines, particularly in the reverse thrust nacelle systems, which are critical components of the propulsion system [9][10]. Summary by Sections Company Overview - The company is a key player in the aviation engine and gas turbine component manufacturing sector, with a history dating back to the "First Five-Year Plan" in China [22]. - It has multiple subsidiaries that cover nearly the entire industrial chain, enhancing its ability to supply a full range of aviation components [4][7]. Domestic Market Potential - The domestic military aircraft market is expected to provide long-term growth opportunities due to ongoing upgrades and new deployments [8][49]. - The aviation engine is classified as a high-value consumable, creating a sustained demand for replacement and maintenance services [49]. International Market Dynamics - The company has established high barriers to entry in the international market, with a lengthy qualification process for international commercial aviation engine customers [56][59]. - The foreign trade business has shown robust growth, with revenues increasing from 0.63 billion yuan to 15.19 billion yuan over 17 years, reflecting a compound annual growth rate (CAGR) of 21% [62]. Financial Projections - The company is expected to achieve net profits of 0.92 billion yuan, 1.47 billion yuan, and 2.29 billion yuan for the years 2025, 2026, and 2027, respectively, with year-on-year growth rates of 34.0%, 59.8%, and 55.3% [10]. Key Competitive Advantages - The company possesses advanced manufacturing capabilities and technologies, including high-efficiency adaptive processing and fatigue resistance techniques, which are essential for producing high-performance aviation components [28][31]. - The subsidiary, AECC Harbin Bearing, is the only aviation bearing product platform under AECC, highlighting its unique asset value in the market [62].

Investment Rating - The report initiates coverage with a "Buy" rating for the company [9]. Core Viewpoints - The company is a core asset of China Aviation Engine Corporation (AECC) and has established a comprehensive industrial chain covering various aviation component categories. It has a strong competitive edge in the manufacturing of aviation engine parts, particularly in domestic and international markets [2][6]. - The company is expected to benefit from the domestic market's shift towards self-sufficiency in aviation engines, particularly in the context of large aircraft development, which presents significant market opportunities for domestic replacements [8][9]. - The company has a robust long-term growth outlook, driven by both domestic demand for military aircraft upgrades and international trade relationships that have been cultivated over two decades [7][9]. Summary by Sections Company Overview - The company is a key player in the aviation engine parts sector, with multiple subsidiaries that cover nearly the entire industrial chain. It specializes in components such as blades, casings, and sheet metal parts, and has a unique position as the only aviation bearing platform under AECC [2][6][19]. Domestic Market Potential - The domestic military aircraft market is expected to drive long-term growth for the company, with an estimated market space of approximately 792 billion yuan for aviation engine components over the next five years. The company is well-positioned to capitalize on the ongoing upgrades and maintenance needs of existing aircraft [7][52]. International Market Dynamics - The company has established strong customer loyalty through over 20 years of collaboration with leading international aviation firms, which is expected to support stable growth in its international business. The barriers to entry in this market are high, ensuring a competitive advantage [7][9][60]. Financial Projections - The company is projected to achieve significant profit growth, with net profits expected to reach 0.92 billion yuan in 2025, 1.47 billion yuan in 2026, and 2.29 billion yuan in 2027, reflecting year-on-year growth rates of 34.0%, 59.8%, and 55.3% respectively [9].

Group 1 - The military industry sector has shown resilience, with the Aerospace ETF (159227) rising by 0.80% and trading volume exceeding 520 million yuan, indicating strong investor interest [1] - Key stocks within the Aerospace ETF include Aviation Industry Corporation of China, which saw a rise of over 7%, along with other companies like Hailanxin, Guanglian Aviation, and Aerospace Technology also experiencing gains [1] - The Aerospace ETF closely tracks the National Defense Industry Index, which is heavily weighted towards the defense and military sectors, with 73% of its weight focused on aerospace and aviation equipment [1] Group 2 - Recent policies from Sichuan's government aim to support the development of the low-altitude economy, including the construction of general airports and enhancements to transport airports for general aviation functions [2] - Financial support measures include a one-time subsidy of up to 5 million yuan for infrastructure projects related to general aviation at transport airports, and up to 20 million yuan for projects involving highland-type general aircraft and medium to large drones [2] - The military industry is expected to see continued activity in themes such as low-altitude economy, commercial aerospace, deep-sea technology, large aircraft, and military intelligence, which are anticipated to drive a resurgence in the overall military market [2]

Group 1 - The aviation equipment sector experienced a short-term surge, with Zongheng Co., Ltd. hitting the daily limit, and other companies like Guolian Aviation, Hangxin Technology, and others also seeing significant gains [1]

Group 1 - The A-share market experienced a decline on the last trading day of May, with the military industry sector showing localized gains. The Aerospace ETF Tianhong (159241) slightly fell by 0.2%, with a turnover rate exceeding 8% and a transaction volume surpassing 15 million yuan, indicating active trading [1] - The Aerospace ETF Tianhong (159241) had a strong debut, closing up 2.21% on its first trading day with a transaction volume of 182 million yuan, ranking first among similar products [1] - The Aerospace ETF tracks the Guozheng Aerospace Industry Index (code CN5082), which reflects the overall performance of securities in the aerospace sector, covering core companies in China's military industry, including military, domestic aircraft, aerospace, and low-altitude economy concepts [1] Group 2 - According to industry distribution, as of the latest data, the military industry accounts for 99.1% of the Guozheng Aerospace Index, with the aerospace equipment, military electronics, ground weaponry, and aerospace equipment sectors representing 66.4%, 16.0%, 7.8%, and 6.9% respectively, indicating a high concentration of the top three sectors at 90% [1] - CITIC Construction Investment suggests focusing on three investment lines in the military industry: traditional military sectors with expected order recovery, new domains emphasizing low-cost and intelligent systems, and companies with asset integration expectations in the military trade market [3] - Northeast Securities believes the defense and military sector has long-term growth certainty, with demand recovering and production capacity structure gradually optimizing, indicating a significant improvement potential for the military sector [3]

Core Points - The China Securities Central Enterprises New Momentum Theme Index (央企新动能, 931522) rose by 1.45% to 1561.4 points with a trading volume of 13.948 billion yuan on May 29 [1] - Over the past month, the index has increased by 0.67%, but it has decreased by 4.52% over the last three months and by 5.92% year-to-date [1] Index Composition - The index consists of 45 representative listed companies from state-owned enterprises under the State-owned Assets Supervision and Administration Commission, focusing on manufacturing, technology, and modern service industries [1] - The top ten weighted stocks in the index are: Hikvision (10.04%), Guodian NARI (9.88%), Changan Automobile (8.93%), AVIC Optoelectronics (7.16%), AVIC Aircraft (4.0%), China Software (3.84%), China Merchants Highway (3.63%), AVIC Chengfei (3.28%), Shenzhen South Circuit (3.26%), and Baoxin Software (3.2%) [1] Market Distribution - The market distribution of the index holdings shows that the Shenzhen Stock Exchange accounts for 59.38%, the Shanghai Stock Exchange for 40.31%, and the Beijing Stock Exchange for 0.31% [1] - In terms of industry composition, the index holdings are distributed as follows: Industrial sector 50.43%, Information Technology 33.68%, Consumer Discretionary 9.38%, Communication Services 4.06%, Financials 1.65%, and Materials 0.79% [2] Index Adjustment - The index samples are adjusted semi-annually, with adjustments implemented on the next trading day following the second Friday of June and December each year [2] - Weight factors are adjusted in accordance with the sample adjustments, and in special circumstances, the index may undergo temporary adjustments [2]