军工本周观点：继续进攻

Investment Rating - The report maintains an "Outperform" rating for the defense and military industry [3]. Core Viewpoints - The defense and military index increased by 1.99% this week, outperforming the CSI 300 index, which rose by 1.32%, resulting in a relative excess return of 0.68 percentage points. This marks a rebound after two weeks of decline, indicating a shift from thematic enthusiasm to a phase driven by fundamental performance [1][8]. - The report highlights that the military sector's investment logic is transitioning to a phase driven by fundamental demand, with expectations for demand to materialize in the near future [1][2]. - The commercial aerospace sector has shown significant early reactions, particularly following the successful launch of the Long March 12 rocket, which is expected to catalyze further market activity in the upcoming year [1][2]. Summary by Sections 1. Weekly Market Review - The defense and military index rose by 1.99% from November 25 to November 29, while the CSI 300 index increased by 1.32%, resulting in a relative excess return of 0.68 percentage points. The military index ranked 18th among 31 sectors during this period [8][19]. - Since May 2024, the military index has increased by 19.77%, compared to an 8.66% rise in the CSI 300 index, leading to a relative excess return of 11.11 percentage points, ranking 7th among sectors [21]. 2. Key Investment Themes - The report identifies two main investment themes: 1. Reversal of Main Battle Equipment Dilemmas: Key companies include AVIC Engine, AVIC Xi'an Aircraft, AVIC Shenyang Aircraft, and Hongdu Aviation [6]. 2. Emergence of New Combat Capabilities: This includes unmanned systems (e.g., Aerospace Rainbow), munitions (e.g., Guokai Military Industry), and information technology (e.g., Zhongke Star Map) [6][7]. 3. Funding and Valuation - Financing buy-in amounts have decreased slightly, indicating a temporary decline in leveraged interest in the military sector. However, the report anticipates a potential resurgence in financing buy-in and passive fund inflows due to strong demand recovery expectations for 2024 Q4 to 2025 [2][37]. - As of November 29, the military index's price-to-earnings ratio (TTM) stands at 61.1 times, placing it in the 79.92 percentile historically. Despite being relatively high, the report suggests that the current valuation still holds configuration value given the anticipated recovery in industry fundamentals [2][32][42].