军工行业本周观点：低成本装备建设发展元年

Investment Rating - The report maintains a "Strong Buy" rating for the defense and military industry, indicating a positive outlook for the sector [3][42][44]. Core Viewpoints - The defense and military index increased by 2.87% this week, outperforming the Shanghai and Shenzhen 300 index, which rose by 2.14%, reflecting a relative excess of 0.73 percentage points [3][42]. - Significant contracts were signed this week, including a contract worth 176 million yuan for an inertial navigation device and another worth approximately 270 million yuan for a gyroscope product, both expected to be delivered by 2025 [3][42]. - The year 2025 is anticipated to be a pivotal year for the mass production of low-cost equipment, driven by urgent demands for equipment upgrades as the "14th Five-Year Plan" concludes and the "15th Five-Year Plan" begins [3][43]. - The report highlights a strong recovery expectation for the industry in 2025, with a focus on low-cost equipment that is expected to show marginal changes in orders [3][43]. Summary by Sections Market Performance - The defense and military index ranked 23rd among 31 first-level industries this week, indicating a relatively poor performance despite a 10.87% increase since May 2024 [8][14]. - Various sub-sectors, including information technology and commercial aerospace, outperformed the defense and military sector this week [20][24]. Individual Stock Performance - Notable stock performances included significant gains for companies like Jin Aobo (61.21%) and Shijia Photon (25.16%), attributed to positive earnings forecasts [22][24]. - Conversely, stocks such as Lian Shi Aviation and Aerospace Electric experienced declines, primarily due to previous overvaluations [22][24]. Funding and Valuation - The report notes a significant increase in financing buy-ins and balances for the military sector, indicating strong confidence from leveraged and passive funds [3][32][26]. - As of January 17, the military sector's price-to-earnings ratio (TTM) stands at 56.72, reflecting a return to the median level of the past five years, suggesting high allocation value at this time [4][32][44].