军工行业本周观点：三季报落地风险出尽

Investment Rating - The report maintains a "Strong Outperform" rating for the defense and military industry [2]. Core Viewpoints - The defense and military index has risen by 9.48% since October 8, while the Shanghai and Shenzhen 300 index has decreased by 1.53%, indicating significant outperformance of the military sector [1][4]. - The report suggests that the risks associated with the third-quarter reports have been largely resolved, and it anticipates a steady upward trend for the military index in the long term [1][20]. - Recent developments in low-altitude economy and commercial aerospace have provided positive catalysts for the sector, with various government initiatives and satellite launches contributing to optimism [1][4]. - The report highlights that the military sector remains underweighted in public fund allocations, with a heavy position of 2.73% in the military industry, indicating potential for further investment [1][20]. - As of October 25, the military index's price-to-earnings ratio (TTM) stands at 54.27, which is at the median level since the start of the 14th Five-Year Plan, suggesting substantial investment value given the expected recovery in the industry [1][20]. Summary by Sections Weekly Market Review - The military index rose by 4.04% from October 21 to October 25, outperforming the Shanghai and Shenzhen 300 index, which increased by 0.79% [4][9]. - Since May 2024, the military index has gained 22.11%, significantly outperforming the broader market [4][10]. - Most sub-sectors, except aerospace, performed better than the military index, with engines showing notable gains due to previous underperformance [4][14]. Key Insights - The report emphasizes that the upcoming third-quarter disclosures will be a focal point for trading, with expectations of a comprehensive recovery in the military sector [1][4]. - The report identifies two main investment themes: the reversal of challenges in main battle equipment and the emergence of new operational capabilities [3][4]. Fund and Valuation Analysis - The report notes a slight net outflow from military ETFs despite the index's strong performance, indicating stable market confidence [20][22]. - The military sector's valuation remains attractive, with most companies expected to have valuations below 35 times earnings for 2024, suggesting a favorable long-term outlook [20][25].