Investment Rating - The industry investment rating is "Outperform the Market - A" [1] Core Insights - The year 2026 marks the first year of the "14th Five-Year Plan" implementation, characterized by frequent mergers and acquisitions among state-owned enterprises and stronger stock performance of private enterprises compared to state-owned ones [4][11] - The "14th Five-Year Plan" has a unique aspect with the 2027 centenary of the military, potentially leading to order front-loading and structural changes [4][24] - The overall industry is returning to a value investment focus, prioritizing orders and performance, with upstream sectors expected to outperform downstream [4][23] Summary by Sections Section 1: Characteristics of the First Year of the Industry Cycle and "14th Five-Year Plan" Outlook - The first year of the five-year plan typically sees strong industry development certainty but limited stock price surprises due to prior expectations [8] - Historical data shows significant fluctuations in index performance, with the first year often experiencing a decline in EPS growth [7][9] Section 2: Outlook for Subsequent Supply and Demand - Demand is expected to show marginal improvement, while supply-side capacity is significantly increasing, indicating potential marginal shocks in certain industry segments [22] - The industry is expected to experience a recovery in sectors that underperformed during the latter half of the "14th Five-Year Plan," such as aerospace and aviation engine sectors [4][24] Section 3: Key Tracks and Structural Focus - Recommended focus areas include intelligent grouping, aerospace industry (including both aviation and commercial aerospace), and carrier-based aircraft [4][23] - Structural focus should be on aviation engines and the demand expansion and industrialization of PEEK materials [4][35]

截至2025年11月25日收盘，航空航天ETF天弘(159241)换手18.14%，位居深市同类产品第一，成交9732.01 万元，市场交投活跃。跟踪的国证航天航空行业指数(CN5082)下跌0.46%。成分股方面涨跌互现，航天发 展(000547)领涨3.37%，国博电子(688375)上涨3.16%，上海瀚讯(300762)上涨2.70%。 3、天弘基金直击亚洲通航展！ 拉长时间看，截至11月25日，航空航天ETF天弘(159241)近17个交易日合计"吸金"4402.10万元。 【产品亮点】 航空航天ETF天弘(159241)跟踪的国证航天指数精准覆盖了空天产业链。其中，航空装备与航天装备的权 重合计超过73%，是全市场"含航量"最高的军工指数。其前十大重仓股包括航发动力、中航沈飞、中航成 飞等央企龙头企业，既具备核心资产的稳定性，又拥有中小市值的成长弹性。 【热点事件】 1、国家新兴产业发展示范基地创建工作启动，聚焦低空装备、航空航天等领域 近日，工业和信息化部印发通知，启动国家新兴产业发展示范基地创建工作。示范基地面向2035年和"十 五五"时期国家发展战略，聚焦新一代信息技术、新能源、新材料、生物 ...

Group 1: ESG Ratings and Trends - In 2024, 26% of Chinese companies saw their MSCI ESG ratings upgraded, marking a historical high, with the upgrade ratio significantly exceeding the downgrade ratio [1] - Over the past five years, the MSCI ESG ratings of A-share listed companies in China have shown a steady improvement and a notable increase in the proportion of leading companies [1] - The proportion of companies in the MSCI China A-share index with upgraded ESG ratings reached 36.8%, with the number of companies rated as globally leading (AA and above) doubling from 7.2% to 14% [1] Group 2: ESG Committees and Guidelines - Ten A-share listed companies, including Zejing Pharmaceutical and Lianang Micro, have released ESG committee guidelines [2] - Some companies, such as Shanghai Jiubai and Zhidema, have revised parts of their guidelines [2] Group 3: ESG Indices - China Securities Index Co., Ltd. launched the CSI 2000 ESG Benchmark Index and the CSI 2000 ESG Leading Index [3] - The CSI 2000 ESG Benchmark Index excludes the bottom 20% of companies by ESG score from the CSI 2000 sample, while the Leading Index selects the top 30% of companies by ESG score within each industry [3] Group 4: Legal Issues and Penalties - Golden Dragon Fish's subsidiary, Guangzhou Yihai, was convicted of contract fraud and fined 1 million yuan, with a joint compensation responsibility for economic losses amounting to 1.881 billion yuan [4] - Anhui Sanhe Sihzi Tongle Liquor Co. was fined 10,000 yuan for falsely labeling production dates on its products [5] - Keg Precision Machinery's general manager was sentenced to one month of detention with a three-month probation for dangerous driving [6]

Group 1: ESG Ratings and Trends - In 2024, 26% of Chinese companies had their MSCI ESG ratings upgraded, marking a historical high, with the upgrade ratio significantly exceeding the downgrade ratio [1] - Over the past five years, the MSCI ESG ratings of A-share listed companies in China have shown two notable trends: a steady overall rating improvement and a significant increase in the proportion of leading companies [1] - The proportion of companies in the MSCI China A-share index with upgraded ESG ratings reached 36.8%, with the number of companies rated as globally leading (AA and above) doubling from 7.2% to 14% [1] Group 2: ESG Committees and Indices - Ten A-share listed companies, including Zhejing Pharmaceutical and Li'an Micro, have released ESG committee guidelines [2] - The China Securities Index Company launched the "CSI 2000 ESG Benchmark Index" and "CSI 2000 ESG Leading Index," which exclude the lowest 20% of ESG scoring companies from the CSI 2000 sample [2][3] - The CSI 2000 ESG Leading Index selects the top 30% of securities based on ESG scores within each industry, ensuring a minimum sample size of 600 securities [3] Group 3: Legal and Regulatory Issues - Golden Dragon Fish's subsidiary, Guangzhou Yihai, was convicted of contract fraud, fined 1 million yuan, and ordered to compensate for economic losses amounting to 1.881 billion yuan [4] - Anhui Huawen International Trade Co. and Yunnan Huijia Import and Export Co. are involved in the compensation case alongside Guangzhou Yihai [4] - The company has filed an appeal against the ruling [4] Group 4: Administrative Penalties - Anhui Sanhe Sizi Tongle Liquor Company was fined 10,000 yuan for marking false production dates on its products, specifically for 24 bottles of osmanthus wine [5] - The company was also ordered to forfeit the illegally marked products and related labels [5] Group 5: Climate Financing - The Asian Development Bank's role has evolved from being a fund provider to a knowledge and innovation partner, focusing on climate financing and cooperation [6] - Despite geopolitical challenges in global climate negotiations, there is cautious optimism for pragmatic cooperation [6] - The ADB aims to drive climate goals through a dual approach of "funding + intelligence," providing project financing while emphasizing standard building and experience sharing [6]

Investment Rating - The report maintains an "Overweight" rating for the defense and military industry [6]. Core Insights - The geopolitical uncertainty, particularly regarding Japan's shift from "strategic ambiguity" to potential military intervention in the Taiwan Strait, has heightened the focus on the military industry [19][20]. - The defense sector is expected to see increased attention and potential investment opportunities due to the evolving geopolitical landscape [11][20]. Market Overview - The defense and military index of Shenwan fell by 1.72% this week, while the Shanghai Composite Index dropped by 3.90% [29]. - The defense and military sector's PE (TTM) stands at 67.3 times, with sub-sectors like aviation equipment at 71.5 times and aerospace equipment at 271.2 times [36]. Key Sector Dynamics Controlled Nuclear Fusion - Shanghai Electric has disclosed its involvement in multiple major fusion projects, including the domestic first plasma burning experiment device BEST and the international ITER project [21]. Low-altitude Economy - The 27th High-Tech Fair's low-altitude economy exhibition in Shenzhen showcased over 200 companies, covering the entire supply chain from eVTOL to drone components [22]. Aviation Engines & Turbines - China Aviation Power showcased 19 types of power products at the Dubai Airshow, marking the first appearance of the C919 in the Middle East [23]. Satellite Internet - The World Internet Conference highlighted the application of satellite internet in enhancing county-level economic development [26]. Suggested Focus Areas - **Missile and Military Electronics**: Companies like Zhenhua Technology, Hongyuan Electronics, and Huada Electronics are recommended for investment [16]. - **Aviation Engines**: Focus on companies like AVIC Engine and AVIC Control [16]. - **Military Trade**: Companies such as AVIC Chengfei, AVIC Shenyang, and AVIC Xi'an are highlighted [16]. - **New Domains and Quality Construction**: Emphasis on commercial aerospace and low-altitude economy companies [16].

Group 1 - The "14th Five-Year Plan" marks a significant advancement in military construction, establishing a new military structure of "4 services + 4 branches" and achieving a leap in weaponry development, with military industrial companies' revenue reaching 419.43 billion yuan in 2024, a 25.24% increase from 2020 [1][19] - The military industrial sector's revenue growth is supported by the delivery of new generation weapons, with 119 listed military companies reporting a total revenue of 280.18 billion yuan in the first three quarters of 2025, a year-on-year increase of 3.23% [1][19] - The fixed assets of 119 military industrial companies reached 167.15 billion yuan by the end of Q3 2025, a 53.45% increase from the end of 2020, indicating enhanced research and production capabilities [1][19] Group 2 - The "15th Five-Year Plan" is expected to shift the focus from quantity to quality in military modernization, emphasizing high-quality development and structural opportunities in new domains such as unmanned intelligence and advanced weaponry [2][34] - The military's equipment demand is anticipated to grow steadily, with significant opportunities in new domains and qualities, including low-cost equipment and advanced weaponry, as outlined in the "15th Five-Year Plan" [2][36] - The military industrial sector is advised to focus on new generation traditional equipment and new domain capabilities, with recommendations for companies involved in unmanned systems, ground robots, and military AI [3][4] Group 3 - The military trade market is expected to grow rapidly, with China's military trade market share at only 5.87% compared to the US's 42.64%, indicating significant room for growth [4] - The application of military technology in strategic emerging industries presents vast market opportunities, with recommendations to focus on commercial aerospace, low-altitude economy, deep-sea technology, and nuclear energy [4] - Key companies to watch in the military trade market include AVIC Shenyang Aircraft Corporation, Guorui Technology, and Aerospace Rainbow, while companies in military technology applications include Zhenlei Technology and Aerospace Electronics [4]

Investment Rating - The report maintains an "Outperform" rating for the defense and military industry [5]. Core Insights - The report emphasizes the anticipation of the 14th Five-Year Plan and the significant growth expected in both domestic and international demand for the military industry, driven by multiple catalysts such as the centenary of the military and rapid development in military trade [4][44]. - The military industry is expected to see a strong recovery in demand by 2026, with a current TTM price-to-earnings ratio of 67.34, indicating a high allocation significance at this time [4][44]. Summary by Sections 1. Weekly Market Review - The military index (801740) decreased by 1.72% from November 17 to November 21, outperforming the CSI 300 index, which fell by 3.77% [10][15]. - Since the beginning of 2025, the military index has risen by 11.39%, while the CSI 300 index has increased by 13.18%, resulting in a relative underperformance of -1.79% [17]. 2. Core Weekly Insights - The report highlights the recent naval exercises involving the Fujian aircraft carrier and various aircraft, showcasing advancements in military capabilities [3][43]. - The Dubai Airshow featured high-end aviation equipment from the Aviation Industry Corporation of China, indicating efforts to expand international markets [3][43]. 3. Important News and Announcements - The report notes significant developments in the aerospace sector, including successful satellite launches and advancements in fusion energy technology [50][51]. - It also mentions initiatives to promote low-altitude economic applications and the establishment of modern state-owned forest farms [52][53]. 4. Funding and Valuation - Passive fund inflows into the military sector have continued, with a net inflow of 3.88 billion yuan over the week, despite a slight decrease in fund size [29][44]. - The report indicates that the military sector's valuation remains attractive, with a projected recovery in demand expected to enhance performance in the coming years [4][44].

Investment Rating - The report maintains a "Positive" investment rating for the defense and military industry [5] Core Viewpoints - The uncertainty in the Asia-Pacific situation is increasing, which may accelerate the equipment construction in China, focusing on new combat capabilities [2][12] - China's high-end aviation equipment showcased at the Dubai Airshow is expected to further expand the military trade market [12][15] - The Fujian aircraft carrier has conducted its first live training at sea, indicating a significant advancement in operational capabilities and technology [12][18] - The report emphasizes the importance of domestic demand for new combat capabilities and military trade as key growth areas [19] Summary by Sections Investment Suggestions and Targets - The report highlights various investment targets across different segments, including: - Engine and fuel chain: Companies like Xi'an Aero Engine (600893), Western Superconducting (688122), and others [19][20] - New quality and domains: Companies such as Aerospace Electronics (600879), Haige Communication (002465), and others [19][20] - Military electronics: Companies like Aerospace Electric (002025), Zhonghang Optical (002179), and others [19][20] - Military trade and main equipment: Companies such as AVIC Shenyang Aircraft (600760), AVIC Chengfei (302132), and others [19][20] Industry News and Market Performance - The report notes that the defense and military industry index has outperformed the broader market, with a decline of only -1.72% compared to the Shanghai Composite Index's -3.90% [22][25] - The report provides a detailed analysis of weekly market performance, indicating that the defense and military sector remains resilient amid broader market declines [22][25] Key Events and Developments - The report outlines significant recent events, including: - The U.S. government approved a new round of arms sales to Japan, which may heighten regional tensions and prompt China to expedite its military equipment development [12][9] - The successful live training of the Fujian aircraft carrier, showcasing advanced operational capabilities [12][18] - The participation of Chinese high-end military equipment in international exhibitions, enhancing China's presence in the global military trade market [12][15]

Investment Rating - The report maintains a positive outlook on the defense and military industry, indicating an "Overweight" rating, suggesting that the industry is expected to outperform the overall market [6][25]. Core Insights - The report highlights that the military industry is entering a new growth cycle as the "14th Five-Year Plan" concludes and the "15th Five-Year Plan" approaches, with expectations for accelerated recovery in the industry [6][3]. - It notes that the military trade landscape is evolving due to increased global geopolitical uncertainties, leading to a surge in demand for military products, particularly in markets like the Middle East and Asia [6][3]. - The report emphasizes the importance of focusing on key sectors within the military industry, such as next-generation equipment, unmanned weapons, and information technology, which are expected to see rapid growth starting in 2025 [6][3]. Market Review - Last week, the Shenwan Defense and Military Index fell by 1.72%, while the overall market indices, including the Shanghai Composite Index and the ChiNext Index, experienced larger declines, indicating that the military sector outperformed these broader indices [3][7]. - The report provides a detailed performance analysis of individual stocks within the military sector, highlighting significant gainers such as Jianglong Shipbuilding (up 64.97%) and Aerospace Development (up 31.77%), while also noting underperformers like Tongyou Technology (down 15.95%) [3][13][14]. Valuation Changes - The report indicates that the current price-to-earnings (PE) ratio for the Shenwan military sector is at a historically high level, with a PE-TTM of 75.63, placing it in the upper range of historical valuations since January 2014 [6][14]. - It also notes that there is a divergence in valuations among sub-sectors, with aerospace and aviation equipment showing relatively high PE ratios compared to other segments [6][14]. Key Investment Targets - The report identifies several key investment targets within the military sector, including high-end combat capabilities and new quality combat forces, suggesting a focus on companies like AVIC Shenyang Aircraft (600316.SH) and AVIC Xi'an Aircraft (600768.SH) [6][19][21]. - It emphasizes the potential for significant returns from companies involved in advanced military technologies and systems, particularly those aligned with the upcoming "15th Five-Year Plan" initiatives [6][19].

Group 1 - The Shanghai 180 Index (000010) shows mixed performance among its constituent stocks, with GAC Group (601238) leading with a 10.00% increase, followed by AVIC Shenyang Aircraft (600760) up 3.59%, and 360 Security Technology (601360) up 3.49%. Industrial Fulian (601138) is the biggest loser [1] - The Shanghai 180 ETF Index Fund (530280) is currently priced at 1.17 yuan, reflecting the performance of the Shanghai 180 Index, which selects 180 securities with large market capitalization and good liquidity from the Shanghai stock market [1] - Dongguan Securities indicates that factors such as the "14th Five-Year Plan" policy guidance, capital market policy developments, and the backdrop of declining interest rates continue to positively influence the market [1] Group 2 - As of October 31, 2025, the top ten weighted stocks in the Shanghai 180 Index include Kweichow Moutai (600519), Zijin Mining (601899), and Ping An Insurance (601318), with these stocks collectively accounting for 26.29% of the index [2] - The Shanghai 180 ETF Index Fund has several off-market connection options, including Ping An's various linked funds [2]