Core Viewpoint - The aviation equipment sector experienced a decline of 0.31% on January 15, with Fenghuo Electronics leading the drop, while the Shanghai Composite Index fell by 0.33% and the Shenzhen Component Index rose by 0.41% [1] Group 1: Stock Performance - Hongdu Aviation (600316) closed at 41.64, up by 9.29% with a trading volume of 552,200 shares and a transaction value of 2.285 billion [1] - Hangxin Technology (300424) closed at 19.96, up by 4.72% with a trading volume of 337,200 shares and a transaction value of 661 million [1] - Feilihua (300395) closed at 97.45, up by 3.78% with a trading volume of 388,300 shares and a transaction value of 3.778 billion [1] - ST Lihang (603261) closed at 27.80, up by 3.04% with a trading volume of 12,100 shares and a transaction value of 33.1054 million [1] - AVIC Xi'an Aircraft Industry (000768) closed at 28.80, up by 2.75% with a trading volume of 738,400 shares and a transaction value of 2.12 billion [1] - AVIC Shenyang Aircraft (600760) closed at 61.18, up by 2.34% with a trading volume of 393,000 shares and a transaction value of 2.428 billion [1] Group 2: Capital Flow - The aviation equipment sector saw a net outflow of 1.183 billion from institutional investors, while retail investors had a net inflow of 980 million [2] - The top stock with the highest net inflow from institutional investors was Feilihua (300395) with a net inflow of 4.24 billion, representing 11.23% of its trading volume [3] - Zhonghang Shenyang (600760) had a net outflow of 1.65 billion from retail investors, accounting for 6.81% of its trading volume [3]

Core Viewpoint - The company is actively expanding its commercial aerospace business by leveraging its existing technology and expertise in aerospace components and materials [2] Group 1: Commercial Aerospace Development - The company has applied its commercial aerospace-related technologies to various products, including rocket fairings, satellite composite structure panels, large onboard composite antennas, optical instrument sunshields, and solar sails [2] - A dedicated team has been established to promote the expansion of the commercial aerospace business, with plans to increase R&D investment focusing on lightweight and high-reliability applications of composite materials [2] - The company aims to enhance its integrated service capabilities to seize opportunities in the growing commercial aerospace industry [2] Group 2: Aerospace Equipment Sector - In the aerospace equipment field, the company is leveraging its foundation in large aircraft and rocket component manufacturing to focus on the research and production of related structural components [2] - The company plans to keep pace with industry trends by exploring opportunities for supporting space transportation equipment and deepening collaboration across the industry chain [2]

Group 1 - The company, AVIC Xi'an Aircraft Industry Group, stated that it currently has no cooperative business with AVIC Satellite and AVIC Weitong, and is not a supplier to them [2]

Core Viewpoint - The company, AVIC Xi'an Aircraft Industry Group, is actively expanding its composite materials technology for commercial aerospace applications, showcasing its capabilities in manufacturing large-scale components for rockets and satellites [1] Group 1: Technology and Applications - The company's composite materials technology has been applied to various products, including rocket fairings, satellite composite structure panels, large on-board composite antennas, optical instrument sunshields, and solar sails [1] - The company possesses the largest manufacturing capability for aircraft and components in China, being one of the few entities capable of producing large liquid rocket and aerospace vehicle components [1] - In satellite reflector manufacturing, the company can achieve both "large size" and "high precision" simultaneously [1] Group 2: Business Development - A dedicated team has been established to expand the company's commercial aerospace business, actively engaging with industry chain enterprises [1] - The company plans to focus on technological iteration and capacity enhancement while deepening cooperation to expand application scenarios [1]

Group 1 - The company, AVIC Xi'an Aircraft Industry (000768.SZ), stated on its interactive platform that it is not a supplier for Blue Arrow Aerospace as of now [1]

Group 1 - Aerospace and aviation concept stocks experienced significant declines in early trading, with Aerospace Electronics down over 8%, AVIC High-Tech down over 6%, and AVIC Heavy Machinery down over 5% [1] - Several aerospace-related ETFs also fell by more than 8%, reflecting the overall market trend [1] Group 2 - Specific ETFs reported the following price changes: Aerospace ETF (1.327, -8.67%), High-end Equipment ETF (1.222, -8.46%), Aerospace Aviation ETF (1.585, -8.28%), and others showing similar declines [2] - Analysts believe that recent improvements in top-level design and new policy support in the commercial aerospace sector have clarified the development blueprint for the industry, enhancing market confidence in its long-term growth [2] - With decreasing launch costs and increased in-orbit computing power, the future of space computing is expected to create a "more launches, more savings" scenario, potentially leading to a transformative industrial change with scalable commercial value [2]

Core Viewpoint - The report from China Merchants Securities indicates that AVIC Xifei has announced related party transaction forecasts, with related procurement remaining at a high level, and demand is expected to continue at elevated levels [1] Group 1: Related Procurement and Sales - The company anticipates related procurement for 2026 to be 21.637 billion, reflecting a slight decrease of 3.78% compared to the expected amount for 2025, yet still maintaining a high operational level [1] - Related sales are projected to be 1.305 billion, which represents a significant decline of 32.7% compared to the previous year's expected amount [1] Group 2: Future Developments - On January 2, 2026, Xinhua News Agency reprinted a commentary from a CCTV special commentator discussing the expected debut of the H-20, suggesting that new models may achieve progress in 2026, potentially bringing new growth opportunities for the company [1] - The company, as the sole manufacturer of transport and bomber aircraft in China, focuses on continuous improvement and series development of aviation products, while enhancing operational efficiency through cost reduction and comprehensive value chain cost management [1] Group 3: Investment Rating - The report maintains a "strongly recommended" rating for the company, reflecting confidence in its future performance and market position [1]

Group 1 - The commercial aerospace sector is experiencing significant growth, with the launch of the Ceres-1 rocket scheduled between January 16-18, 2026, targeting a launch window at approximately 4 AM [1] - China has submitted an application for frequency resources for over 200,000 satellites by December 2025, indicating a strong push in satellite deployment [1] - Key events such as increased launch density, technology validation milestones, and accelerated constellation networking are expected to catalyze the commercial aerospace market [1] Group 2 - The China Defense Index (399973) has seen a strong increase of 4.57%, with notable stock performances from companies like Guobo Electronics (up 19.99%) and Zhongke Xingtou (up 17.52%) [1] - The Defense ETF (512670) has also risen by 4.55%, marking its third consecutive increase, with the latest price reported at 1.08 yuan [1] - The top ten weighted stocks in the China Defense Index as of December 31, 2025, include Aerospace Electronics and AVIC Shenyang Aircraft, collectively accounting for 42.34% of the index [2]

Investment Rating - The report maintains an "Accumulate" rating for the industry [6] Core Insights - The commercial aerospace sector is entering a high prosperity cycle, with significant growth expected in the next two years due to technological advancements and increased demand for launch services and satellite networks [9][24] - The domestic large aircraft sector is poised for dual improvements in airline deliveries and localization rates, particularly with the C919 and C909 aircraft [13][28] Summary by Sections Commercial Aerospace - The global commercial aerospace industry is expected to experience an explosive growth phase, driven by rapid technological iterations and engineering advancements [9] - Policy initiatives, such as the establishment of the Commercial Aerospace Administration, aim to enhance the industry's development and regulatory framework [25] - Technological breakthroughs, including successful launches of new rocket models, are providing a solid foundation for commercial space missions [26] - The integration of artificial intelligence with commercial aerospace is creating new business opportunities, particularly in "space computing" [33] Domestic Large Aircraft - The C919 aircraft is projected to deliver 25 units in 2026, with efforts to expand its international market presence [13][28] - The CJ-1000A engine is undergoing certification processes to enhance the domestic aviation industry's self-sufficiency [14][28] - The C919 highland version has successfully completed its first assembly, marking a significant milestone in the development of domestic large aircraft [35] Key Sector Dynamics - In the aerospace equipment sector, Blue Arrow Aerospace has signed contracts to provide batch launch services for satellite internet projects [38] - The low-altitude economy is advancing with the AS700 manned airship receiving production licenses and completing its first delivery [41] - The nuclear equipment sector has achieved breakthroughs in fusion technology, indicating progress in high-density operations [42] Market Overview - The defense and military industry index has seen a significant increase of 13.63%, outperforming other major indices [46] - The current price-to-earnings ratio (PE) for the defense and military sector stands at 89.4, with various sub-sectors showing high valuation metrics [53]

Investment Rating - The report maintains a "Strong Buy" rating for the company [2][4]. Core Insights - The company is expected to see high levels of related transactions, with a forecasted related procurement amount of 21.637 billion, reflecting a slight decrease of 3.78% compared to the previous year, but still indicating sustained high demand [8]. - Anticipation for the official debut of the H-20 model in 2026 may provide new growth opportunities for the company [8]. - Revenue and profit are projected to grow steadily, with net profit estimates for 2025, 2026, and 2027 at 1.141 billion, 1.302 billion, and 1.488 billion respectively, corresponding to price-to-earnings ratios of 73, 64, and 56 [2][3]. Financial Data and Valuation - Total revenue is projected to increase from 40.301 billion in 2023 to 59.188 billion in 2027, with year-on-year growth rates of 7%, 7%, 5%, 13%, and 15% respectively [3][16]. - Operating profit is expected to rise from 1.023 billion in 2023 to 1.727 billion in 2027, with significant growth rates of 75%, 16%, 12%, 14%, and 14% [3][16]. - The company's net profit attributable to shareholders is forecasted to grow from 861 million in 2023 to 1.488 billion in 2027, with growth rates of 65%, 19%, 11%, 14%, and 14% [3][16]. - The company’s earnings per share (EPS) is projected to increase from 0.31 in 2023 to 0.54 in 2027 [3][16]. - The report indicates a current price-to-earnings (PE) ratio of 96.8 for 2023, decreasing to 56.0 by 2027 [3][16].