军工行业本周观点：继续乐观

Investment Rating - The report maintains an "Outperform" rating for the defense and military industry [5]. Core Viewpoints - The report expresses continued optimism for the military industry, highlighting a 2.57% increase in the Shenwan Military Index (801740) compared to a 1.59% increase in the CSI 300 Index, resulting in an excess return of 0.98 percentage points [2][43]. - The 2025 government work report emphasizes "deep-sea technology" as a new emerging industry, which has positively impacted related stocks [3][43]. - The macro-level focus on completing the "14th Five-Year Plan" is expected to accelerate improvements in the industry's fundamentals [3][44]. - The report notes a slight decrease in financing buy-in amounts, but an increase in military ETF fund sizes and shares, indicating stable confidence from passive funds in the military sector [3][44]. Summary by Sections Market Performance - The Shenwan Military Index increased by 2.57% during the week of March 10-14, outperforming the CSI 300 Index by 0.98 percentage points [10][17]. - Since May 2024, the Shenwan Military Index has risen by 22.96%, while the CSI 300 Index has increased by 11.16%, resulting in an excess return of 11.8 percentage points [19][10]. - The engine sector performed the best this week, with significant gains from stocks like Baotai Co., which rose by 21.07% due to the "deep-sea technology" theme [24][10]. Investment Opportunities - The report suggests focusing on traditional main battle equipment and high-elasticity sectors that will cross the "15th Five-Year Plan" cycle [45][47]. - Key companies to watch include: - Traditional Equipment: AVIC Shenyang Aircraft, AVIC Xi'an Aircraft, and others [47]. - High Elasticity Directions: Commercial engines, materials, information technology, low-cost drones, and controlled nuclear fusion [47]. Valuation and Funding - As of March 15, the TTM price-to-earnings ratio for the Shenwan Military Index is 63.72, with a percentile rank of 86.27%, indicating a high configuration value despite some valuation increases [4][45]. - The report notes that passive funds have shown a net inflow of 949 million yuan into military ETFs, reflecting strong confidence in the sector [30][44].