Core Viewpoint - The company has been expanding its international market since 2006, and this segment is a significant part of its revenue [1] Group 1 - The company's future business plan allocates revenue sources with a ratio of 4:4:2 for defense, strategic emerging industries, and international market business respectively [1]

Core Viewpoint - The company, Aerospace Electric (002025.SZ), indicated that foreign customer orders account for approximately 7% of its total annual order volume for 2025, with a smaller proportion coming from European clients. Currently, the company has not established any subsidiaries abroad [1]. Group 1 - The proportion of orders from foreign customers is around 7% of the total annual orders for 2025 [1] - Orders from European clients represent a relatively small portion of the company's total annual orders [1] - The company has not set up any subsidiaries in foreign markets as of now [1]

Core Viewpoint - Aerospace Electric (002025) emphasizes that its stock price fluctuations are influenced by various factors in the capital market, while the management focuses on core responsibilities and improving operational quality to create value for shareholders [1] Group 1 - The company acknowledges that stock price volatility is affected by multiple factors in the capital market [1] - The management is committed to focusing on its core business operations [1] - The company aims to enhance operational quality and actively create value for its shareholders [1]

Group 1 - The company provides connectors, cables, micro motors, relays, and optical communication devices for the aerospace sector [1] - The company is aligned with the technological and product development trends in downstream fields, ensuring the provision of relevant resources [1] - The company offers products and technical services to downstream clients [1]

Core Viewpoint - The company emphasizes its commitment to focusing on its core business and continuously improving management practices to enhance operational quality and create value for shareholders [1] Group 1 - The company has maintained a focus on its main responsibilities and core business since its listing [1] - Continuous optimization and improvement of management practices are key strategies employed by the company [1] - The company aims to showcase its investment value through various means [1]

Core Viewpoint - Aerospace Electric's products, including connectors, cables, micro motors, relays, and optical devices, are widely used in aerospace, electronics, aviation, shipping, and communication sectors, receiving recognition from both defense and civilian customers [1] Group 1 - The company offers a range of products that are essential for various industries, including aerospace and electronics [1] - The technology and quality of the company's products have been acknowledged by clients in both defense and civilian sectors [1]

Core Insights - The report emphasizes the growth potential in the commercial aerospace and large aircraft sectors, highlighting the importance of the defense and military industry in these areas [2][3] Group 1: Industry Overview - The Chinese aerospace sector is set to advance with initiatives like the "Tian Gong Kai Wu" plan, focusing on space tourism, smart infrastructure, and resource development [13] - The commercial aircraft and aerospace sectors are experiencing sustained high demand, with a focus on self-reliance in aviation engine development and the establishment of a strong aviation industry [14] Group 2: Investment Recommendations - The report identifies three key investment themes based on the "S-curve" evolution: 1. Supply chain reform and maintenance growth, recommending companies like AVIC Power and AVIC Control [15] 2. Expansion into overseas markets and civilian applications, recommending companies such as Guorui Technology and China Power [15] 3. New emerging industries like commercial aerospace and AI, recommending companies like Ruichuang Micro-Nano and Feilihua [15] Group 3: Company Analysis - AVIC Power is positioned as a core supplier in the aviation sector, benefiting from high-end aircraft production and potential market share growth in the civil aviation engine sector [21] - AVIC Heavy Machinery is expected to see revenue growth due to its comprehensive product offerings in aviation and engine sectors, with a focus on high-value components [23] - Guorui Technology is leveraging its radar business and low-altitude safety solutions, with projected revenue growth driven by defense modernization and low-altitude economic development [20] - Feilihua is a leading supplier of quartz materials for aerospace and semiconductor industries, benefiting from ongoing demand in both sectors [19] - Ziguang Guowei is focusing on the IC industry, with significant growth expected in the AI and communication sectors, emphasizing its competitive advantages in domestic and international markets [18]

Core Insights - The report emphasizes the ongoing prosperity in the commercial aerospace and military sectors, highlighting opportunities in overseas markets and the importance of technological advancements in the industry [2][3] Group 1: Industry Overview - The commercial aerospace sector is experiencing upward momentum, driven by SpaceX's advancements in reusable rocket technology, which could reduce space access costs by 100 times [13] - The military aviation sector is expected to benefit from increased demand for large aircraft and military trade, with significant growth anticipated in 2026 [14] - The report identifies a focus on supply chain reforms and the integration of AI technologies as key trends shaping the future of the defense and aerospace industries [15] Group 2: Investment Recommendations - The report recommends companies that align with the "S-curve" evolution, focusing on supply chain reforms and automation, including firms like航发动力 (Aero Engine Corporation) and 中航沈飞 (AVIC Shenyang Aircraft Corporation) [15] - Companies positioned for expansion in military trade and civil aviation, such as 国睿科技 (Guorui Technology) and 中国动力 (China Power), are highlighted for their growth potential [15] - Emerging industries like commercial aerospace, AI, and quantum computing are also recommended, with firms like 睿创微纳 (Ruichuang Micro-Nano) and 菲利华 (Feilihua) noted for their innovative capabilities [15] Group 3: Company Valuations and Financial Analysis - 航发动力 (Aero Engine Corporation) is projected to have a 2025E EPS of 0.22 CNY, with a PE ratio of 216.82 for 2025 [6] - 中航高科 (AVIC High-tech) is expected to achieve a 2025E EPS of 0.90 CNY, with a PE ratio of 29.16 for 2025 [6] - The report provides detailed financial metrics for various companies, indicating growth in EPS and improvements in PE ratios across the sector, reflecting a positive outlook for the defense and aerospace industries [6]

Core Viewpoint - The A-share market experienced a significant sector rotation, particularly in the large aircraft sector, with major stocks like Changhe Aircraft Industries and others hitting the daily limit up, indicating a collective surge in the industry chain [1] Group 1: Market Movement - The large aircraft sector saw a collective rally with 13 leading stocks reaching their daily limit up, indicating strong investor interest and confidence in the sector [1] - The surge in the large aircraft sector is attributed to recent disclosures from the National Social Security Fund, which revealed new investments in seven leading companies within the large aircraft industry chain [3][4] Group 2: Key Companies and Investments - Chaojie Co., a core supplier of fasteners for the C919 aircraft, was highlighted as a new investment by the social security fund, becoming its sixth-largest shareholder with 670,000 shares [3] - Xice Testing, the only private entity with full-chain aerospace testing qualifications, saw the social security fund increase its holdings to 3.5 million shares, making it the fourth-largest shareholder [3] - Aero Engine Corporation of China (AECC) Technology, a key player in the C919 engine supply chain, attracted new investments from major international banks like Goldman Sachs and UBS [3] - Hangya Technology, a leader in the domestic aviation precision forging blade sector, received new investments from the social security fund, becoming the eighth and ninth largest shareholders [4] - Hongdu Aviation, a core enterprise under AVIC, is the sole supplier of the C919's front and rear fuselage, with the social security fund acquiring 5 million shares [4] Group 3: Industry Developments - The European Union Aviation Safety Agency (EASA) completed the compliance flight test for the C919, providing a positive evaluation that exceeded market expectations and facilitating its entry into the EU market [6] - The CJ-1000A domestic engine has completed extensive testing, resolving previous capacity constraints and is expected to receive certification by the second quarter of 2026 [6] - Predictions indicate that C919's annual production capacity could rapidly increase to 50-70 aircraft by 2027, with plans to raise production from 30 to 60 aircraft in 2026 [7] Group 4: Market Potential - The existing orders for C919 exceed 1,000 aircraft, representing a market scale of 650 billion yuan, with the potential to drive over 2 trillion yuan in value across the supply chain [7] - The Yangtze River Delta region has become a hub for the large aircraft industry, housing over one-third of the national aircraft supply chain suppliers [7] - By 2043, China's civil aviation fleet is projected to reach 10,061 aircraft, making it the largest single aviation market globally, with an expected reception of 9,323 new passenger aircraft over the next 20 years [8]

Investment Rating - The report maintains an "Outperform" rating for the commercial aerospace industry [1] Core Insights - The aerospace sector is transitioning from being viewed as a "cost center" driven by national will to a "growth engine" driven by commercial demand, with significant investments and strategic planning from both the US and China [6][9] - The global aerospace economy is projected to reach $613 billion in 2024, with commercial aerospace contributing 78%, and is expected to exceed $1 trillion by 2032 [6][9] - The value chain of commercial aerospace is divided into five core levels: "space, ground, terminal, rocket, and application," each presenting unique market opportunities and technical challenges from 2026 to 2030 [10][29] Summary by Sections 1. Space: Satellite Manufacturing - The satellite manufacturing market in China is expected to grow from approximately 7.1 billion yuan in 2025 to about 39.4 billion yuan by 2030, reflecting a shift from sporadic research models to continuous, batch engineering deliveries [16][18] 2. Ground: Ground Systems - The ground systems market is projected to increase from around 1.2 billion yuan in 2025 to approximately 39.1 billion yuan by 2030, evolving from a supporting role to a core infrastructure essential for stable satellite constellation operations [21][22] 3. Terminal: Key Variable for Commercial Aerospace - The terminal market is anticipated to grow from 500 million yuan in 2025 to about 141.9 billion yuan by 2030, driven by multiple vertical industries and potential consumer scenarios [23][24] 4. Rocket: Core Constraint - The cost of rocket launches is a critical constraint, with reusable technology expected to reduce costs by 80%-90% compared to traditional expendable rockets. The market for rocket launch services is projected to grow from approximately 10.7 billion yuan in 2025 to about 34.3 billion yuan by 2030 [25][26] 5. Application: Final Value Realization - The application market is expected to expand from 200 million yuan in 2025 to 525 billion yuan by 2030, with the revenue share from applications projected to rise from single digits to over 67% by around 2030 [27][28] 6. Investment Opportunities - Investment opportunities in commercial aerospace can be categorized into three main tracks: 1. Launch and manufacturing segments, which are expected to benefit directly from increased orders and visibility 2. Core components and systems, characterized by high technical barriers and critical for long-term competitiveness 3. Downstream applications and operational services, which, while currently limited in scale, hold the greatest long-term potential for value realization [29][30]