Core Viewpoint - The delivery of the AS700 manned airship marks a significant milestone for the aviation industry in East China, showcasing advancements in domestic aerospace technology and the potential for commercial operations in the future [1][3]. Group 1: Product Overview - The AS700 manned airship, developed by the China Aviation Industry Corporation's Special Aircraft Research Institute, is the first manned airship in China designed according to airworthiness standards and possesses complete independent intellectual property rights [3]. - The airship measures 50 meters in length, has a maximum range of 700 kilometers, and can carry up to 10 people [3]. - It is characterized by its ability to fly slowly at low altitudes, providing a safe and reliable experience for tourists to enjoy scenic views from an optimal altitude of 100 to 300 meters [3]. Group 2: Future Plans - The AS700 airship will undergo flight verification in the Yuecheng District to advance its commercialization process [3]. - There are plans to open the airship to the public next year, indicating a move towards operational readiness and potential market introduction [3].

Investment Rating - The report maintains an "Overweight" rating for the industry [5]. Core Viewpoints - The "Aerospace Power" strategy is steadily advancing, and there are promising investment opportunities in the commercial aerospace sector [8][20]. - The number of commercial aerospace companies in China has exceeded 600, with a total of 25 launch sites, indicating a significant acceleration in the commercial aerospace industry [9][20]. Summary by Relevant Sections Industry Overview - The total market capitalization of the industry is approximately 28,978.52 billion yuan, with a circulating market value of 25,088.15 billion yuan [3]. - The defense and military industry index has a PE (TTM) of 70.4 times, with various sub-sectors showing different valuations [44]. Key Developments - The "14th Five-Year Plan" has successfully launched major aerospace projects, including manned spaceflight and deep space exploration, laying a solid foundation for becoming a space power [20]. - The Long March 7 modified rocket successfully launched the Remote Sensing Satellite 46, marking a significant achievement in satellite deployment [32]. Investment Opportunities - Suggested focus areas include missile and military electronics, with specific companies highlighted such as Zhenhua Technology and Hongyuan Electronics [16][20]. - In the commercial aerospace sector, companies like Aerospace Intelligence and Aerospace Electronics are recommended for investment [20]. Market Performance - The defense and military industry index experienced a decline of 0.47% recently, while the overall market indices showed positive growth [37]. - The report indicates a significant drop in financing buy-in amounts, suggesting a cautious market sentiment [47].

Group 1 - The Aerospace ETF (159227) experienced a slight decline, with a current increase of 1.15% and a trading volume of 205 million yuan, maintaining its position as the largest in its category [1] - The latest scale of the Aerospace ETF (159227) is 1.726 billion yuan, with significant holdings in stocks such as Triangle Defense and Aviation Power Technology, which reached their daily limit [1] - As of July 2025, the commercial aerospace sector in China has completed 31 financing events this year, totaling 2.143 billion yuan, indicating a rapid acceleration towards industrialization [1] Group 2 - Wanlian Securities predicts that 2025 will mark a significant acceleration period for China's commercial aerospace industry, driven by advancements in reusable rocket technology and the normalization of high-density launch tasks [1] - The Aerospace ETF (159227) closely tracks the Guozheng Aerospace Index, which has a high military industry purity of 98.2%, covering key sectors such as aerospace equipment and satellite navigation [2] - The commercial aerospace concept accounts for 51.83% of the index's weight, highlighting its importance within the broader military industry framework [2]

Core Viewpoint - The aerospace ETF (159227) is experiencing significant growth, with a 1.59% increase and a trading volume of 1.25 billion yuan, indicating strong market interest and performance in the aerospace sector [1]. Group 1: ETF Performance - The aerospace ETF (159227) has reached a total scale of 1.726 billion yuan, making it the largest aerospace ETF in the market [1]. - Key holdings in the ETF, such as Triangular Defense and Aero Engine Corporation of China, have hit the daily limit, reflecting positive investor sentiment [1]. Group 2: Industry Developments - The 2025 Nanchang Flight Conference and Aerospace Industry Expo recently concluded, showcasing over 60 aerospace companies and research institutions, highlighting advancements in low-altitude economy products [1]. - The low-altitude economy is seeing significant breakthroughs across policy and industry levels, with a potential trillion-yuan market emerging [1]. - The aerospace ETF closely tracks the Guozheng Aerospace Index, selecting leading companies in sectors such as large aircraft manufacturing, low-altitude economy, and commercial aerospace [1].

Investment Rating - The report suggests increasing attention to the military industry, focusing on elastic and thematic varieties, with a positive outlook for the sector as it enters a growth cycle driven by the 14th Five-Year Plan [4][5][6]. Core Viewpoints - The military industry is experiencing important marginal changes, with overall revenue and performance yet to recover. The industry saw a year-on-year revenue decline of 1.68% and a net profit decline of 10.95% for Q1-Q3 2025 [4][5][21]. - Profitability across various equipment sectors and industry chain segments has slightly decreased, but there is potential for improvement as scale effects become evident [4][5][23]. - Operational indicators show stable growth, indicating sustained industry prosperity, with significant increases in inventory and contract liabilities [4][5][26]. Summary by Sections 1. Revenue and Profit - The military industry reported a revenue of 483.6 billion yuan for Q1-Q3 2025, reflecting a year-on-year decrease of 1.68%. The decline is attributed to the need for recovery in industry demand [18][21]. - The aviation sector contributed the most to the industry's revenue and net profit, accounting for 46% and 58% respectively in Q1-Q3 2025 [38][42]. 2. Profitability Indicators - The overall gross margin and net margin for the military industry were 18.04% and 5.07% respectively, both showing a decline compared to previous years due to product price fluctuations and rising fixed costs [23][25]. - The military electronics sector maintained the highest profitability levels, while other sectors experienced slight fluctuations in margins [4][5][23]. 3. Operational Indicators - Key operational metrics such as inventory, accounts payable, and contract liabilities have shown significant year-on-year increases, indicating robust demand and production readiness [4][5][26]. - As of Q3 2025, the military industry had an inventory of 366.9 billion yuan, with a year-on-year increase of 13.19%, and contract liabilities of 220.4 billion yuan, reflecting a 30.96% increase [26][27]. 4. Key Companies to Watch - High-end combat capabilities: Companies such as AVIC Shenyang Aircraft Corporation, AVIC Chengdu Aircraft Industry Group, and others are highlighted as key players [6]. - New quality combat capabilities: Companies like Unisoc, Raycus Laser, and others are noted for their potential in the evolving military landscape [6].

Group 1 - The defense and military industry sector continues to adjust, with the popular defense military ETF (512810) showing active buying despite fluctuations, indicating a potential turning point in fund flows [1] - From the end of October, the net subscription of the ETF has exceeded 22 million yuan over three consecutive trading days, reflecting positive market sentiment towards the sector's future [1] - Key stocks in the sector include Fushun Special Steel, which rose nearly 6%, along with Huali Chuantong, Shanda Shares, and Guorui Technology, while Guobo Electronics, Great Wall Military Industry, and Aerospace Science and Technology saw significant declines [3] Group 2 - The successful launch of the Shenzhou 21 manned spacecraft on October 31, 2025, marks a significant step in China's aerospace ambitions [3] - Major manufacturers like AVIC Shenyang Aircraft Corporation and Aero Engine Corporation of China reported significant growth in contract liabilities in Q3, indicating a sustained improvement in aerospace equipment orders and steady recovery in industry demand [3] - Analysts predict substantial growth in defense and aerospace equipment sectors driven by multiple catalysts, including the 14th Five-Year Plan, the centenary of the military, and rapid development in military trade [3] - The ETF tracks the CSI Military Industry Index, with top ten weighted stocks including China Shipbuilding, Guangqi Technology, AVIC Shenyang, and others [3]

Investment Rating - The investment rating for the company is "Buy" and is maintained [8]. Core Views - The company reported a revenue of 22.912 billion yuan for the first three quarters of 2025, a year-on-year decrease of 11.73%. The net profit attributable to the parent company was 108 million yuan, down 85.13% year-on-year. The net profit after deducting non-recurring gains and losses was 68 million yuan, a decrease of 90.02% year-on-year. In Q3 2025, the revenue was 8.814 billion yuan, an increase of 18.97% year-on-year and 11.1% quarter-on-quarter. However, the net profit attributable to the parent company was 16 million yuan, down 87.69% year-on-year and 80.79% quarter-on-quarter. The net profit after deducting non-recurring gains and losses was 30 million yuan, a decrease of 78.14% year-on-year but an increase of 56.2% quarter-on-quarter [2][6]. Financial Performance Summary - For the first three quarters of 2025, the company experienced a significant decline in profitability, with a gross profit margin of 10.74%, down 1.29 percentage points year-on-year. The expense ratio increased to 9.15%, up 0.97 percentage points year-on-year, while the net profit margin was 0.83%, down 2.32 percentage points year-on-year. The R&D expense ratio rose to 1.79%, an increase of 0.49 percentage points year-on-year, and the financial expense ratio increased to 1.92%, up 0.77 percentage points year-on-year [12]. Market Position and Future Outlook - The growth in contract liabilities indicates a recovery in downstream demand, and the transition of new products to mass production is expected to drive the industry into a prosperous cycle. As of the end of Q3 2025, the company's construction in progress was 2.454 billion yuan, an increase of 10.51% compared to the beginning of the period. The balance of fixed assets was 22.605 billion yuan, a slight increase of 0.3% compared to the beginning of the period. The balance of contract liabilities was 8.319 billion yuan, an increase of 85.45% compared to the beginning of the period [12].

Investment Rating - The industry investment rating is maintained at "Overweight" [5] Core Views - The third quarter reports of the sector show a lackluster performance, but certain sub-sectors continue to exhibit sustained prosperity [8][24] - The successful launch of the Shenzhou 21 manned spacecraft marks the beginning of a new journey for China's space power [29][30] Summary by Relevant Sections Industry Overview - The defense and military industry consists of 142 listed companies with a total market value of approximately 2,937.05 billion yuan and a circulating market value of about 2,540.09 billion yuan [2] Market Performance - The defense and military industry index decreased by 0.07% in the past week, ranking 22nd among 31 first-level industries [7] - The current PE (TTM) for the defense and military industry index is 70.9 times, with various sub-sectors showing different PE ratios [7] Key Company Dynamics - Major manufacturers like AVIC Chengfei reported a revenue of 27.58 billion yuan in Q3 2025, with a year-on-year increase of 58.6% [25] - AVIC Shenyang's revenue increased by 62.8% year-on-year, while AVIC Xi'an maintained stable growth [24][25] Component and Electronics Sector - The passive components sector has shown significant year-on-year improvement, driven by increased orders related to missile production [10][28] - Companies like Torch Electronics and Hongyuan Electronics have seen their performance gradually improve since Q2 [10][28] Aerospace Developments - The "Fifteen Five" plan has officially included "building a space power" as an independent goal, indicating a significant policy shift towards the aerospace industry [30] - The successful launch of the Shenzhou 21 spacecraft is part of a broader strategy to enhance China's capabilities in space exploration and technology [29][30] Emerging Opportunities - The commercial space sector is expected to see rapid growth, with multiple private companies working on reusable rocket technologies [15][30] - The nuclear fusion project in Anhui is projected to be completed by 2027, with significant investments anticipated in the coming years [33][36] Recommendations for Attention - Focus on missile and military electronics, particularly companies like Zhenhua Technology and Hongyuan Electronics [21][32] - Monitor developments in the aerospace engine sector, including companies like AVIC Power [21][32] - Keep an eye on the commercial aerospace and low-altitude economy sectors, with companies like Aerospace Rainbow and Zongheng Co. [21][32]

Investment Rating - The report maintains a positive investment rating for the military industry, suggesting a focus on key companies and sectors within the industry [8]. Core Insights - In Q3 2025, active funds reduced their allocation to the military sector, with a decrease of 0.57 percentage points, marking a continued trend of low allocation since Q1 2025 [3][4]. - The scale of military-themed funds has shown a recovery, increasing by 10.62% to 44 billion yuan in Q3 2025, indicating a potential shift in investor sentiment [21][22]. - Active funds have primarily increased their holdings in the aerospace sector while reducing exposure to other segments, reflecting a concentrated investment strategy [5][26]. Summary by Sections Fund Allocation Analysis - In Q3 2025, active funds had a military allocation of 872 billion yuan, which is 2.23% of their total holdings, a slight decrease from the previous quarter [12][13]. - The military sector ranked 26th out of 30 in terms of allocation changes among various industries, indicating a significant reduction in military exposure [17][19]. Holdings Concentration - The concentration of active fund holdings increased to 72.62% for the top 15 stocks, recovering above 70% after three consecutive quarters of decline [24]. - The top five stocks held by active funds include AVIC Shenyang Aircraft Company, Ruichuang Micro-Nano, and Aero Engine Corporation of China, with significant changes in the number of funds holding these stocks [31][33]. Sector Performance - The total assembly segment's market value share surpassed upstream segments for the first time, reaching 37%, while the upstream segment accounted for 36% [5][27]. - The aerospace sector accounted for 37% of the total market value held by active funds, with a notable increase in holdings compared to other segments [27][28]. Recommendations for Focus - The report suggests focusing on new-generation traditional equipment and new combat forces, highlighting key companies such as AVIC Shenyang, Feilihua, and various AI computing and military trade-related firms [6].

Market Overview - The aviation equipment sector experienced a decline of 1.17% on October 31, with Western Superconducting leading the drop [1] - The Shanghai Composite Index closed at 3954.79, down 0.81%, while the Shenzhen Component Index closed at 13378.21, down 1.14% [1] Stock Performance - Notable gainers in the aviation equipment sector included: - *ST Guandian (688287): Closed at 5.21, up 5.25% with a trading volume of 58,700 shares and a turnover of 30.28 million yuan [1] - Weihai Guangtai (002111): Closed at 10.23, up 3.02% with a trading volume of 162,000 shares and a turnover of 165 million yuan [1] - Hangya Technology (688510): Closed at 23.26, up 2.83% with a trading volume of 46,900 shares [1] - Major decliners included: - Western Superconducting (688122): Closed at 78.20, down 7.40% with a trading volume of 479,900 shares and a turnover of 3.895 billion yuan [2] - Feilihua (300395): Closed at 78.56, down 5.69% with a trading volume of 354,300 shares and a turnover of 2.851 billion yuan [2] - Zhonghang Shenfei (600760): Closed at 61.08, down 2.44% with a trading volume of 221,200 shares and a turnover of 1.368 billion yuan [2] Capital Flow - The aviation equipment sector saw a net outflow of 1.776 billion yuan from institutional investors, while retail investors contributed a net inflow of 1.176 billion yuan [2][3] - Specific stock capital flows included: - Hongdu Aviation (600316): Net inflow of 24.22 million yuan from institutional investors [3] - Haite High-tech (002023): Net inflow of 9.10 million yuan from institutional investors and 10.78 million yuan from retail investors [3] - Boyun New Materials (002297): Net inflow of 46.28 million yuan from retail investors, but a net outflow of 6.27 million yuan from institutional investors [3]