Minsheng Securities·2025-06-13 11:12Investment Rating - The report maintains a positive investment outlook for the defense and military industry, suggesting that the military trade market may become a new growth point for the industry [10]. Core Insights - The international military trade landscape is undergoing significant changes due to ongoing geopolitical conflicts, with China poised to strengthen its position in the global military industry [1][2]. - China is transitioning from a "follower" to a "leader" in military trade, with increasing exports and a focus on high-tech, high-value products [3][4]. - The report highlights the growing demand for advanced military equipment driven by recent conflicts and increased defense budgets in various regions [4]. Summary by Sections 1. Geopolitical Conflicts and Global Military Trade Dynamics - The report discusses the escalation of geopolitical conflicts, including the Russia-Ukraine conflict and the India-Pakistan tensions, which are reshaping military power dynamics and trade patterns [2][13]. - Global military expenditure has entered a growth phase, with an estimated $2.72 trillion in 2024, marking a 9.4% increase year-on-year, the largest since the end of the Cold War [2][18]. 2. Country Analysis: China's Transition to a Leader - China's military exports are primarily focused on aircraft, accounting for 29% of total exports, with Pakistan being the largest recipient, purchasing 48% of China's total export value over the past decade [3][31]. - The report notes that China has significantly reduced its military imports, with a drop from 4.3% of global imports in 2015 to 0.2% in 2024, while its exports are shifting towards high-tech products [4][28]. 3. Development Opportunities in China's Military Trade - The report identifies a potential turning point for China's military trade, driven by international demand and China's technological capabilities [4][5]. - Key investment opportunities are highlighted in various sectors, including radar systems, guided weapons, drones, military aircraft, and armored vehicles, with specific companies recommended for investment [5][8]. 4. Global Military Trade Landscape - The U.S. remains the dominant player in global military trade, with a 39% share of exports, followed by Russia and France [21][22]. - The report emphasizes the diversification of global military imports, with Saudi Arabia and India being the largest importers, while China's import share has been declining [28][29]. 5. Key Companies and Sectors to Watch - The report suggests focusing on companies involved in radar systems, guided weapons, drones, military aircraft, and naval vessels, indicating a robust growth potential in these areas [5][8].