Shenwan Hongyuan Securities·2026-02-09 10:42Investment Rating - The report rates the defense and military industry as "Overweight" indicating an expectation for the industry to outperform the overall market [2][3]. Core Insights - The report highlights that the order transmission is orderly, and an inflection point in performance is anticipated. A selection of 55 key companies in the military industry chain is expected to achieve a total net profit of approximately 10.15 billion yuan in Q4 2025, representing a year-on-year increase of 99.7%, and a total net profit of about 27.67 billion yuan for the year 2025, reflecting a year-on-year growth of 8.7% [3]. - Performance across different segments is expected to vary due to customer structure and revenue recognition timing. For instance, the electronic components segment is projected to see significant growth in companies like Zhenhua Technology and Hongda Electronics, while high-end materials may experience mixed results [3]. - The report emphasizes the importance of the 14th Five-Year Plan and the upcoming 15th Five-Year Plan, which aim to enhance the quality and modernization of the military, suggesting that the military industry will enter a new cycle of quality improvement and growth [3]. - The report suggests maintaining a high level of attention to the military industry as it enters the 15th Five-Year Plan period, with expectations for continued improvement in fundamentals and order delivery [3]. - Investment opportunities are identified in both domestic demand growth and emerging fields driven by technological advancements, including areas such as military trade, commercial aerospace, and deep-sea technology [3]. Summary by Sections Key Companies and Performance Forecast - The report lists key companies and their expected performance for Q4 2025 and the full year 2025, with notable growth rates in various segments. For example, Zhenhua Technology is expected to grow by 17.3% in Q4 2025, while companies like Chengdu Huami and Unisoc are projected to see growth rates of 395.1% and 171.7%, respectively [4][5]. - The report provides a detailed table of expected profits for various companies, indicating significant growth potential in the military industry [4][6]. Investment Focus Areas - The report identifies specific companies to watch, including AVIC Shenyang Aircraft Corporation, Feilihua, and Unisoc for domestic demand, and companies like Ruichuang Micro-Nano and Aerospace Electronics for external growth opportunities [3]. - It highlights the importance of technological advancements and the evolving landscape of military needs, suggesting that companies involved in smart technology and unmanned systems will be key players in the future [3].