Orient Securities·2025-06-09 03:23Investment Rating - The report maintains a "Positive" outlook on the Chinese defense and military industry [5] Core Insights - The military trade is expected to become a second growth curve for the industry, with Indonesia considering the procurement of Chinese J-10 fighter jets due to their high performance and cost-effectiveness [27] - The report highlights that the recent geopolitical tensions have increased military spending globally, creating new opportunities for China's military exports [6][27] - The domestic aviation industry is expected to accelerate the localization of aircraft engines due to U.S. export restrictions on key technologies [6] Summary by Sections Market Trends - The defense and military industry index rose by 0.41% during the week, underperforming compared to the Shanghai Composite Index, which increased by 1.13% [10][11] - The defense and military industry ranked 24th out of 31 sectors in terms of weekly performance [13] News and Announcements - Indonesia is evaluating the feasibility of purchasing Chinese J-10 fighter jets to modernize its air force while considering budget constraints [27] - The U.S. has restricted the export of commercial engines, which is expected to accelerate the domestic development of aviation engines in China [6] Investment Recommendations - The report suggests focusing on upstream components and key materials as they are crucial for weapon development and production, with potential for significant performance improvements [6] - Specific stocks recommended include Zhihua Technology, Aerospace Electric, and others in the upstream components and key materials sectors [6]