Orient Securities·2026-02-01 07:00Investment Rating - The report maintains a "Positive" outlook on the defense and military industry [4]. Core Insights - The report emphasizes the acceleration of the large aircraft sector and commercial aerospace, driven by the strategic goals set by the Aviation Industry Corporation of China (AVIC) during its 2026 work conference [9][12]. - The competition for low Earth orbit satellite resources is intensifying, with countries like Germany and Japan advancing their satellite communication systems, which is expected to boost China's satellite networking progress [15][16]. - The "14th Five-Year Plan" is set to enhance military equipment construction, highlighting the potential for growth in both domestic and international military markets, particularly in unmanned systems and commercial aerospace [16]. Summary by Sections 1.1 AVIC's 2026 Work Conference - The conference outlined three strategic tasks: accelerating the independent development of aviation engines, achieving high-level technological self-reliance, and building a strong aviation nation [12]. - The focus is on developing five pillar industries: commercial power, general aviation power, civil gas turbines, system onboard, and advanced materials manufacturing services [12][14]. 1.2 Competition in Space Resources - Germany is deploying a domestic "Starlink" system to ensure national security and communication sovereignty, with potential contracts worth billions of euros [15]. - The report notes that China's satellite internet development is entering a rapid networking phase, with over 100 satellites already in orbit [15][16]. 1.3 Continued Optimism for Various Sectors - The report highlights the importance of the military sector's internal and external demand, focusing on new combat capabilities and the expansion of military trade markets [16]. - Key investment targets include companies involved in large aircraft, commercial aerospace, and military electronics, with specific recommendations for stocks such as AVIC Power (600893), AVIC Aircraft (600372), and Aerospace Electronics (600879) [16].