Group 1 - The National Space Administration of China announced a notification on enhancing quality supervision and management of commercial space projects, aiming to improve quality levels and promote standardized management in the commercial space sector [1] - The commercial aerospace sector is entering a phase of infrastructure construction and application demand exploration, with significant changes occurring in policy, funding, and industry dimensions [1] - The CN5082 Aerospace Industry Index component stocks showed mixed performance, with Changcheng Military Industry leading with a 10.01% increase, while Inner Mongolia First Machinery Group led the decline [1] Group 2 - The Aerospace ETF (159227) tracks the CN5082 Aerospace Index and has a high concentration in defense and military sectors, with a 98.2% weight in the industry [2] - The top ten weighted stocks in the CN5082 Aerospace Industry Index account for 49.42% of the index, with companies like Guangqi Technology and AVIC Shenyang Aircraft leading the list [2] - The ETF focuses on aerospace capabilities, with a significant weight of 66.5% in the "Aerospace + Aerospace Equipment" category within the secondary industry [2]

Group 1 - The aerospace and defense industry is experiencing a significant increase in military spending due to escalating geopolitical conflicts, with China's military enterprises showcasing technological advantages in drones, fighter jets, and missiles, positioning them as key beneficiaries in the arms trade [1] - The Aerospace ETF (159227) has seen a slight increase of 0.35% with a trading volume reaching 202 million yuan, marking a new high since its listing, and its total size is now 614 million yuan, leading in both size and trading volume among its peers [1] - The index tracked by the Aerospace ETF has a high concentration in the military industry, with a 98.2% allocation to the first-level military industry, and the weight of aerospace equipment in its constituent stocks is 66.5%, significantly surpassing other military indices [2] Group 2 - According to Zheshang Securities, the ongoing geopolitical conflicts are expected to lead to a revaluation of China's defense and military enterprises, particularly as military export equipment is tested in overseas conflicts by 2025 [1]

Group 1 - The report aims to summarize important weekly deep reports, significant commentary, and marginal changes within the macro strategy team of large manufacturing [1] - Core stocks identified by the team include Huada Jiutian, Shanghai Yanpu, Zhejiang Rongtai, and others [1] - The core portfolio consists of companies such as Sany Heavy Industry, XCMG Group, and others, indicating a focus on key players in the manufacturing sector [1] Group 2 - As of July 18, 2025, the best-performing indices in the last week included Communication (+8%), Pharmaceutical Biology (+4%), and Automotive (+3%) [2][13] - The top three indices in the large manufacturing sector were Changjiang Lithium Battery Equipment Index (+5%), Automotive Parts (+4%), and Automotive (+3%) [2][15] - A deep report on Xuguang Electronics highlights its leadership in domestic vacuum devices and growth potential in controllable nuclear fusion and electronic materials [4] Group 3 - The report indicates that the total investment of approximately 1.2 trillion yuan in the Yarlung Zangbo River downstream hydropower project has commenced, driving demand for construction machinery [3] - The defense sector is expected to benefit from military trade leading to strategic reassessment, particularly in regions like the Middle East [3] - The competitive landscape for vacuum arc extinguishing chambers shows a high concentration in the domestic market, with a CR2 of about 60% [5] Group 4 - The report forecasts a revenue CAGR of approximately 35% for the megawatt-level electronic tube segment from 2024 to 2027 [4] - The power equipment business is expected to achieve a revenue CAGR of about 10% during the same period, driven by ongoing investments in the power grid [4] - The military business is projected to benefit from increased defense spending, with precision structural components expected to account for 58% of military revenue in 2024 [5] Group 5 - The report anticipates that the company will achieve revenues of 1.95 billion, 2.39 billion, and 3.03 billion yuan from 2025 to 2027, with a CAGR of 24% [4] - The expected net profit for the same period is projected to be 170 million, 210 million, and 270 million yuan, with a CAGR of 39% [4] - The report highlights the company's strong position in the domestic aluminum nitride materials market, benefiting from domestic substitution trends [5] Group 6 - The report notes that the company has a high market share in the medical information technology sector, covering approximately 60% of tertiary hospitals by the end of 2024 [6] - The expected growth in the domestic medical software industry is projected at a CAGR of 11.5% from 2024 to 2029 [6] - The company is collaborating with major players like Huawei to develop a comprehensive intelligent medical information platform [6]

Group 1 - The defense and military industry sector is experiencing localized activity, with significant gains in concepts such as large aircraft and military information technology [1] - The defense military ETF (512810) reached an 8-month high, with real-time transactions exceeding 47 million yuan [1] - Key stocks within the defense military ETF, including Changcheng Military Industry, have hit historical highs [1] Group 2 - Analysts indicate that the defense and military sector is currently in a layout window, with expectations for improved Q2 financial reports [3] - Q1 order volume has increased, leading to potential performance improvements for mid-to-upstream companies in Q2, with a turnaround in military component orders observed in June [3] - Anticipation of a busy Q3 with catalysts as the September 3 military parade approaches, likely increasing attention and trading activity in the sector [3] Group 3 - The defense military ETF (512810) covers a range of themes including commercial aerospace, low-altitude economy, large aircraft, deep-sea technology, and military AI [4] - The ETF has undergone a share split in June, reducing the investment threshold by half, making it more accessible for investors [4] - The ETF is a financing and margin trading target, as well as an interconnectivity target [4]

Group 1 - The military industry sector continues to show strong performance, with companies like Steel Research High-Tech and New Yu Guo Ke rising over 10% [1] - Other companies in the sector, including Holley Wo, Hongdu Aviation, Changcheng Military Industry, Chenxi Aviation, and AVIC Shenyang Aircraft Corporation, also experienced gains [1] - According to Zheshang Securities, geopolitical conflicts are expected to persist into 2025, leading to practical testing of China's military trade export equipment in overseas conflicts, which may result in a revaluation of domestic defense and military enterprises [1]

Core Viewpoint - The Tianhong Advanced Manufacturing A Fund (011851) reported a profit of 300,400 yuan for Q2 2025, with a net value growth rate of 0.26% and a fund size of 147 million yuan as of the end of Q2 2025 [2][17]. Fund Performance - The fund's weighted average profit per share for the reporting period was 0.002 yuan [2]. - As of July 18, 2025, the fund's unit net value was 1.059 yuan [2]. - The fund's performance over different time frames includes: - 3-month net value growth rate: 10.59%, ranking 100 out of 171 comparable funds [4]. - 6-month net value growth rate: 4.78%, ranking 112 out of 171 comparable funds [4]. - 1-year net value growth rate: 16.01%, ranking 97 out of 166 comparable funds [4]. - 3-year net value growth rate: -11.88%, ranking 26 out of 125 comparable funds [4]. - The fund's Sharpe ratio over the past three years was 0.0736, ranking 26 out of 120 comparable funds [10]. - The maximum drawdown over the past three years was 40.31%, ranking 112 out of 122 comparable funds [12]. Investment Strategy and Outlook - The fund manager anticipates a more optimistic market in the second half of the year, contingent on a stable external environment [3]. - Key investment directions for the second half include: - Cyclical sectors benefiting from domestic economic improvement, extending from consumption to manufacturing and from downstream to upstream [3]. - High-tech sectors benefiting from domestic industrial restructuring, including new energy, AI applications, computing power construction, aerospace manufacturing, and innovative pharmaceuticals [3]. Fund Holdings - As of June 30, 2025, the fund's top ten holdings included: - Geely Automobile, CATL, Air China, China Power, Zhongtian Technology, Shantui, Guangdong Hongda, Xiamen Tungsten, AVIC Shenyang Aircraft, and Torch Electronics [20]. Fund Positioning - The fund maintained an average stock position of 87.59% over the past three years, with a peak of 93.24% at the end of 2024 and a low of 70.32% in mid-2021 [15].

Core Viewpoint - The high-end equipment sector is experiencing mixed performance, with notable developments in the defense and aerospace industries, supported by increasing military expenditure and significant contracts. Group 1: Market Performance - As of July 21, 2025, the CSI High-End Equipment Sub-Index decreased by 0.17%, with stocks showing varied performance, including a 5.81% increase in Feiliwa and a 2.33% rise in Hongdu Aviation [1] - The High-End Equipment ETF (159638) saw a turnover of 2.56% and a transaction volume of 32.22 million yuan, with an average daily transaction volume of 55.38 million yuan over the past month [3] - The latest scale of the High-End Equipment ETF reached 1.255 billion yuan, with a total inflow of 22.62 million yuan over the last five trading days [3] Group 2: Financial Metrics - The High-End Equipment ETF has achieved a net value increase of 32.27% over the past year, with the highest single-month return recorded at 19.30% since its inception [3] - The ETF's longest consecutive monthly gains reached two months, with a maximum increase of 29.39% and an average monthly return of 6.55% [3] Group 3: Industry Developments - On July 16, 2025, UAE company Autocraft signed a $1 billion order with Chinese company "Shide Technology" for 350 units of the E20 eVTOL, marking a record single order for China's eVTOL sector [3] - National defense spending in China is expected to grow steadily, providing a solid foundation for the stable development of the defense and military industry, with industry scale and profits likely to continue rising [3] - China's global competitiveness in shipbuilding, aerospace, and satellite navigation has been improving, positioning the defense and military industry as a crucial area for new productivity breakthroughs [3]

Market Performance - The market continued to rise last week, with the Shanghai Composite Index up 0.69%, the Shenzhen Component Index up 2.04%, and the ChiNext Index up 3.17% [1] - The China Securities Xinhua National Brand Index increased by 1.63%, closing at 1706.67 points [1] Strong Stock Performance - Several constituent stocks performed strongly last week, including: - Zhongji Xuchuang up 24.33% - Xinlitai up 20.86% - Ecovacs up over 20% - Woer Biotech and AVIC Shenfei up 15.42% and 12.78% respectively [1] - Year-to-date performance shows: - Xinlitai up 78.17% - WuXi AppTec up 53.33% - Ecovacs up over 50% [2] Market Outlook - Institutions believe the Shanghai Composite Index has stabilized above 3500 points, indicating strong bullish momentum [2] - Increased market profitability is expected to attract more external funds, supported by ample liquidity and positive trading sentiment [2] - The current market may be at the beginning of a new bull market, driven by domestic policy support and improving fundamentals [2] Focus on Earnings and Policies - The upcoming earnings season is expected to significantly impact individual stock performance [3] - Market attention will shift towards domestic policies and Federal Reserve actions, which may form the basis for mid-term trends [3] - Structural opportunities are anticipated to be key for A-share investments in the second half of the year, with a focus on core A-share assets [3]

Investment Rating - The report maintains a "Positive" outlook on the defense and military industry [5] Core Insights - The military trade market is expected to accelerate and improve efficiency, with a continued positive outlook on the military trade sector [10][12] - Geopolitical instability is likely to lead to sustained global demand for military trade, presenting significant development opportunities for China's military trade [14][15] - The current market position suggests a continued positive outlook on the military industry, with military trade expected to become a second growth driver [16] Summary by Sections Military Trade Sector - A high-level meeting between AVIC and Shaanxi Aircraft Industry Group highlighted the importance of military trade, focusing on high-quality development and addressing international market needs [9][12][13] - The European defense sector is undergoing upgrades, with countries increasing defense budgets, which may create supply gaps and opportunities for China's military exports [14][15] Performance and Market Trends - The defense and military industry index increased by 2.26%, outperforming the Shanghai Composite Index [18][19] - The report notes that most military companies have shown rapid growth in their half-year performance for 2025, with significant increases in net profits for several companies [30][32] Investment Recommendations - Suggested investment targets include: - Military Electronics: Zhenhua Technology (000733, Buy), Aerospace Electronics (002025, Buy) [17] - Key Materials and Parts: Western Superconductor (688122, Buy), Chujian New Materials (002171, Buy) [17] - Engine Supply Chain: Aero Engine Corporation of China (600893, Not Rated), Western Superconductor (688122, Buy) [17] - Military Trade: AVIC Shenyang Aircraft Corporation (600760, Not Rated), Guorui Technology (600562, Not Rated) [17]

Investment Rating - The report maintains a positive outlook on the defense and military industry, suggesting an increase in focus on military investments [4][5]. Core Insights - The military trade supply and demand are strongly resonating, creating a new industry landscape, with expectations for continuous progress [5]. - The military industry is entering an upward cycle, driven by domestic demand from military construction, particularly in the transition to "mechanization + informationization" and the upcoming "intelligent + unmanned" equipment [5]. - The global geopolitical changes are expanding military trade demand, with China's military products gaining recognition, leading to a strong resonance between supply and demand in military trade [5]. - The growth cycle in the military sector is expected to enhance industry valuations, with a recognition of "technological equity" in military advancements [5]. - Recommendations include increasing attention to military investments, focusing on next-generation equipment and precision-guided weapons, which are expected to see initial growth by 2025 [5]. Market Review - Last week, the Shenwan Defense and Military Index rose by 2.26%, while the CSI Military Leaders Index increased by 3.68%, outperforming the Shanghai Composite Index, which rose by 0.69% [6][4]. - The top five performing stocks in the defense and military sector were Beihua Co. (23.37%), Yingliu Co. (20.37%), Feilihua (15.98%), AVIC Shenyang Aircraft (12.78%), and Aerospace Power (11.37%) [6][13]. - The bottom five performing stocks included Changchun Yidong (-9.36%), Rongfa Nuclear Power (-6.6%), Rainbow Co. (-6.14%), Guorui Technology (-5.02%), and Galaxy Electronics (-4.66%) [6][13]. Valuation Changes - The current PE-TTM for the Shenwan Military Sector is 83.84, placing it in the upper range historically, with a valuation percentile of 71.57% since January 2014 [14]. - Valuations are slightly differentiated among sub-sectors, with aerospace and aviation equipment at a relatively high valuation since 2020 [14][19]. Key Valuation Targets - The report lists key valuation targets in the military sector, including companies like AVIC Shenyang Aircraft, AVIC Chengfei, and others, with projected net profits and PE ratios for the coming years [21].