ZHONGTAI SECURITIES·2025-08-11 10:57Investment Rating - The report maintains an "Accumulate" rating for the defense and military industry [5] Core Views - The report is optimistic about the gradual improvement of fundamentals and the upward trend in new domains and new quality combat capabilities, particularly in satellite internet construction [8][24] - The defense index has risen by 24.04% since May 6, driven by military trade and parade sentiments, indicating strong market performance [8][23] Summary by Sections Industry Overview - The defense and military industry comprises 143 listed companies with a total market value of 30,365.12 billion and a circulating market value of 25,995.20 billion [2] Market Performance - The defense and military index increased by 5.93% this week, outperforming other major indices [7][37] - The current PE(TTM) for the defense and military sector is 75.6 times, with sub-sectors showing varying valuations [7][43] Key Improvement Tracks - Missile and Military Electronics: Anticipated growth in demand for precision-guided munitions is expected to lead to a surge in military electronics orders starting from Q4 2024 [8][23] - Aerospace Engine Supply Chain: Recovery in military engine procurement and improvements in profitability are expected due to new model introductions and maintenance business growth [9][10][23] Focus Areas for Development - New Generation Manned and Unmanned Aircraft: The J-35 is expected to drive a new wave of growth in the aerospace supply chain [11][23] - Satellite Internet: The successful launch of the seventh batch of satellites for the GW constellation marks significant progress in satellite internet capabilities [12][24] - Commercial Space Industry: The report highlights the acceleration of commercial space activities, with plans for significant satellite launches in 2025 [14][24] Suggested Companies to Watch - Missile and Military Electronics: Companies like Zhenhua Technology, Hongyuan Electronics, and Torch Electronics are highlighted [19][25] - Aerospace Engines: Focus on Aviation Power and its supporting companies [26] - New Generation Unmanned Aircraft: Companies such as AVIC Shenyang Aircraft and AVIC Chengfei are recommended [27] Key Developments - Nuclear Fusion: The "Spark One" project aims to complete construction by the end of 2029, with a goal to demonstrate power generation by 2030 [15][28] - Low-altitude Economy: The successful flight of a 2-ton eVTOL for offshore oil platform logistics marks a significant milestone [16][29]