ZHONGTAI SECURITIES·2025-10-26 12:39Investment Rating - The report maintains an "Overweight" rating for the defense and military industry [6] Core Insights - The 20th Central Committee's Fourth Plenary Session emphasizes the importance of a strong military strategy and the significance of becoming a space power, aiming for high-quality advancement in national defense and military modernization by 2035 [9][19] - The "15th Five-Year Plan" is expected to build on the achievements of the "14th Five-Year Plan," focusing on the 2027 military centenary goal and supporting the modernization of national defense and military capabilities [9][19] - The report highlights the need for advancements in mechanization, information technology, and intelligence integration to enhance combat capabilities and national strategic systems [10][19] Market Overview - The defense and military index rose by 2.81% this week, ranking 12th among 31 primary industries [8][35] - The current PE(TTM) for the defense and military sector is 74.6 times, with sub-sectors showing varying PE ratios, such as aerospace equipment at 73.9 times and aerospace equipment at 182.2 times [8][41] Key Sector Dynamics - Controlled Nuclear Fusion: New Hope Group showcased advancements in hydrogen-boron fusion at the FEC2025 conference, achieving significant milestones in plasma current and magnetic field strength [12][24] - Low-altitude Economy: The Tianjin International Helicopter Expo highlighted the growth potential of the low-altitude economy, with projections estimating a market size of 1.5 trillion yuan by 2025 and over 3.5 trillion yuan by 2035 [13][29] - Aerospace Engines and Turbines: Shanghai Electric successfully completed the assembly and ignition of a heavy-duty industrial gas turbine, indicating progress in domestic manufacturing capabilities [14][30] - Satellite Internet: The China Aerospace Science and Technology Corporation successfully launched a communication technology test satellite, marking a significant achievement in satellite deployment [15][31] Suggested Focus Areas - Missile and Military Electronics: Companies to watch include Zhenhua Technology, Hongyuan Electronics, and Torch Electronics [16][23] - Aerospace Engines: Key players include Aero Engine Corporation of China and related suppliers [16][21] - Military Trade: Focus on companies like AVIC Chengfei and AVIC Shenyang [16][21] - New Domains and Quality Construction: Companies in commercial aerospace and low-altitude economy sectors are recommended for attention [16][22]