国防军工行业周报（2024年第52周）：行业空间巨大成长确定，建议关注订单兑现节奏

Industry Investment Rating - The report maintains a "Overweight" rating on the defense and military industry, indicating that the industry is expected to outperform the broader market [38] Core Views - The defense and military industry has huge growth potential with certainty in growth, driven by the final stages of the 14th Five-Year Plan and the upcoming 15th Five-Year Plan [5][38] - The industry is expected to see order fulfillment acceleration as the 14th Five-Year Plan enters its final year, with new orders expected to drive growth in the coming years [38] - The industry is currently in a short-term adjustment phase, but the overall trend is expected to remain upward due to strong demand and stable growth in military spending [38] - The valuation of the defense sector is currently at historically low levels, presenting a potential investment opportunity [15][16][18] Market Performance - Last week, the Shenwan Defense Index fell by 0.83%, underperforming the CSI 300 (-0.14%) and the Shanghai Composite (-0.7%) but outperforming the ChiNext Index (-1.15%) [11][38] - The top-performing stocks in the defense sector last week were Baosheng Co (22.78%), Western Materials (16.91%), and Phoenix Optics (13.49%), while the worst performers were Chunxing Precision (-15.81%) and Unistrong (-14.73%) [11][14] Valuation and Foreign Investment - The PE-TTM median for the defense sector is currently 69.88, which is in the 56.65% percentile since January 2014 and the 86.88% percentile since January 2019, indicating relatively high historical valuations [43] - Foreign ownership in the defense sector stood at 2.56% as of August 16, 2024, with Aerospace Technology (0.41%) and Tongyou Technology (0.4%) seeing the largest increases in foreign ownership [9][35] Key Investment Themes - High-end combat capabilities: Focus on companies involved in host manufacturers, high-end materials, and precision-guided weapons, which are expected to benefit from increased military spending and technological advancements [38] - New combat capabilities: Emphasis on low-orbit satellites, underwater equipment, and communication data links, which are in the early stages of rapid growth and application expansion [38] Key Companies to Watch - High-end combat portfolio: Companies like AVIC Shenyang, AVIC Xi'an, and AECC Aviation Power are highlighted for their stable growth and strong pricing power [38] - New combat portfolio: Companies such as Aerospace Electronics, Huachuang Technology, and Western Materials are identified as key players in emerging defense technologies [38]