军工行业周报：军工的节奏

Investment Rating - The report maintains an "Overweight" rating for the defense and military industry [3]. Core Insights - The defense and military industry is expected to experience significant marginal improvements following the worst mid-year performance in a decade, with core military enterprises showing a median revenue growth rate of -6.59% and a net profit growth rate of -17.99% for the first half of 2024 [4][19]. - The report highlights the potential for mergers and acquisitions (M&A) and asset securitization to become key themes in the industry, supported by government policies encouraging consolidation and market recognition of these themes as risk appetite increases [5][30]. - Geopolitical events are anticipated to have a heightened impact on the military market, with ongoing global tensions driving demand for military capabilities and equipment [7][10]. Summary by Sections Industry Overview - The defense and military sector has seen a notable increase in the number of listed companies, from approximately 111 in 2015 to 237 by September 2024, with total market capitalization rising from 1.83 trillion to 3.14 trillion [8]. - The industry has experienced a significant increase in asset securitization rates, from 37.30% in 2015 to 50.20% in 2023, indicating a trend towards consolidation and efficiency [9]. Market Performance - From September 24 to October 11, the defense and military index rose by 23.10%, with a volatility of 42.82%, demonstrating resilience compared to broader market indices [2]. - The report notes that during the recent market correction from October 8 to 11, the defense sector's decline of -2.48% was less severe than that of the Shanghai Composite Index (-3.56%) and the Shenzhen Component Index (-4.45%) [2][17]. Investment Opportunities - The report suggests focusing on new domains such as unmanned equipment, satellite internet, and electronic countermeasures, as well as military-civilian integration areas like commercial aerospace and low-altitude economy [11][12]. - Specific investment targets include companies involved in military aircraft, satellite technology, and military materials, with a particular emphasis on firms like AVIC, China Shipbuilding, and others in the defense supply chain [12][13]. Mergers and Acquisitions - The report outlines a trend of increasing M&A activity within the military sector, with 148 recorded transactions from 2015 to 2023, highlighting a shift towards mixed mergers and asset injections as companies seek to enhance their market positions [33][34]. - The government’s recent policy changes are expected to facilitate M&A processes, allowing for greater flexibility in managing competition and related transactions within the industry [32][30].