Core Viewpoint - The Indonesian government is evaluating the feasibility of purchasing Chinese-made J-10 fighter jets, indicating a rising demand for advanced Chinese military equipment in the global market [1] Group 1: Military Trade Dynamics - Geopolitical conflicts are increasing, leading to a notable rise in international military trade, with Chinese weapons gaining attention as potential options for other countries [3] - China's military trade export market share is expected to increase due to the validation of its military strength in the current international landscape [3] Group 2: Domestic Military Spending - The domestic military sector is entering a phase of increased equipment construction, driven by the completion of previously delayed defense tasks and long-term goals such as the centenary of the military in 2027 and modernization by 2035 [5] - China's military spending as a percentage of GDP remains below the average of major military powers, indicating significant room for growth in defense expenditures [5] Group 3: Emerging Themes in Military Industry - New themes such as low-altitude economy, commercial aerospace, deep-sea technology, large aircraft, and military intelligence are becoming increasingly active, suggesting a sustained interest in military innovation [7] - The combination of active themes and improving fundamentals is expected to drive a resurgence in the military sector's overall performance [7] Group 4: State-Owned Enterprise Reforms - Recent reforms in state-owned enterprises (SOEs) are expected to enhance operational quality and improve asset securitization rates within the military industry [9] - The ongoing reform initiatives are showing significant results, with many military SOEs experiencing improved performance post-reform [9] Group 5: Financial Performance Outlook - The military sector is currently experiencing a decline in revenue and profit growth due to various factors, but a narrowing of profit decline is anticipated in the first quarter of 2025, supported by both domestic and international conditions [10] Group 6: Investment Opportunities - The military ETF (512660) is closely tracking the China Securities Military Index, reflecting the overall performance of military-related companies, and is positioned as the largest in its category with a scale of 14.352 billion [12][14] - The top ten constituent stocks of the military index include major players such as China Shipbuilding, AVIC Shenyang Aircraft, and China Aerospace, indicating strong leadership attributes within the sector [13]

Industry Investment Rating - The industry investment rating is "Outperform the Market" [1] Core Viewpoints - Indonesia is considering the procurement of Chinese-made J-10 fighter jets, which is expected to boost the military trade market's activity. The Indonesian government aims to enhance its air force's modernization while ensuring cost-effectiveness in its defense budget. The performance of the J-10 in the India-Pakistan conflict is a significant factor in Indonesia's consideration of this model. Compared to Western counterparts, the J-10 offers a more competitive price and meets Indonesia's demand for "high cost-performance advanced equipment" [10][12][14] - The report suggests that China's military trade, currently accounting for 5.9% of the global military trade market, has the potential for significant growth as China increasingly takes center stage on the world stage [12][14] - Looking ahead to 2025, the military industry is expected to see an inflection point in orders, driven by new technologies aimed at enhancing equipment performance or reducing costs, as well as new market directions from military trade and military technology conversion [14] Summary by Sections 1. Industry Overview - The closing index for the defense industry is at 1508.79, with a 52-week high of 1712.48 and a low of 1113.62 [1] 2. Market Performance - The military industry index increased by 0.07%, while the Shenwan military index rose by 0.41%. The Shanghai Composite Index increased by 1.13%, and the Shenzhen Component Index rose by 1.42% [16] - The top ten performing stocks in the military sector this week include Xinguang Optoelectronics (+10.62%), Huawu Co., Ltd. (+9.71%), and Longda Co., Ltd. (+9.21%) [18] 3. Investment Recommendations - Two main investment themes are suggested: 1) Aerospace and "gap-filling" new focuses, including companies like Feilihua, Fenghuo Electronics, and AVIC Shenyang Aircraft [14] 2) New technologies, products, and markets with greater elasticity, including Aerospace Intelligent Manufacturing and Guangdong Hongda [14] 4. Valuation Levels - As of June 6, 2025, the military industry index stands at 10727.13, with a PE-TTM valuation of 103.35 and a PB valuation of 3.29. Historically, 79.75% of the time since January 1, 2014, the PE-TTM valuation has been below the current level [21][22]

证券研究报告：国防军工|行业周报 发布时间：2025-06-09 行业投资评级 强于大市|维持 | 行业基本情况 | | | --- | --- | | 收盘点位 | 1508.79 | | 52 周最高 | 1712.48 | | 52 周最低 | 1113.62 | 行业相对指数表现 -13% -8% -3% 2% 7% 12% 17% 22% 27% 32% 2024-06 2024-08 2024-11 2025-01 2025-03 2025-06 国防军工 沪深300 资料来源：聚源，中邮证券研究所 研究所 分析师:鲍学博 SAC 登记编号:S1340523020002 Email:baoxuebo@cnpsec.com 分析师:马强 SAC 登记编号:S1340523080002 Email:maqiang@cnpsec.com 近期研究报告 《中邮军工周报 5 月第 4 周：美国防预 算将达 1 万亿美元，创历史新高》 - 2025.05.26 河北一硝化棉厂商煮洗釜爆炸，硝化棉供应紧张或 进一步加剧 ⚫ 投资要点 2025 年 5 月 30 日 18 时 20 分，衡水市武邑县建民纤维素有限 ...

证券研究报告：国防军工|行业周报 发布时间：2025-06-09 行业投资评级 强于大市|维持 行业相对指数表现 -13% -8% -3% 2% 7% 12% 17% 22% 27% 32% 2024-06 2024-08 2024-11 2025-01 2025-03 2025-06 国防军工 沪深300 资料来源：聚源，中邮证券研究所 研究所 分析师:鲍学博 SAC 登记编号:S1340523020002 Email:baoxuebo@cnpsec.com 分析师:马强 SAC 登记编号:S1340523080002 Email:maqiang@cnpsec.com 近期研究报告 《中邮军工周报 5 月第 4 周：美国防预 算将达 1 万亿美元，创历史新高》 - 2025.05.26 | 行业基本情况 | | | --- | --- | | 收盘点位 | 1508.79 | | 52 周最高 | 1712.48 | | 52 周最低 | 1113.62 | 国防军工行业报告 河北一硝化棉厂商煮洗釜爆炸，硝化棉供应紧张或 进一步加剧 ⚫ 投资要点 2025 年 5 月 30 日 18 时 20 分，衡水市武 ...

Group 1 - The core viewpoint of the news highlights the strong performance of the aerospace sector, with the CN5082 index rising by 1.92% and key stocks like AVIC Shenyang Aircraft (600760) increasing by 9.36% [1] - The Aerospace ETF Tianhong (159241) has shown a significant increase of 1.67%, with a trading volume of 12.29 million yuan and a turnover rate of 6.33% [1] - Indonesia is evaluating the feasibility of purchasing Chinese-made J-10 fighter jets to modernize its air force while considering budget efficiency [1] Group 2 - Huatai Securities indicates that global military spending and frequent geopolitical conflicts suggest a substantial upward cycle in the military trade market, with China entering a net surplus phase in military trade [2] - The main export products from China include aircraft, ships, armored vehicles, and missiles, attributed to the high performance and cost-effectiveness of domestically developed military products [2] - The ongoing political conflict between India and Pakistan is expected to strengthen the global military trade logic, leading to a breakthrough in the defense and military market [2] Group 3 - The Aerospace ETF Tianhong has attracted a total of 18.81 million yuan in the last four trading days [3] - The maximum drawdown since the establishment of the Aerospace ETF Tianhong is 0.72%, with a relative benchmark drawdown of 0.22% [3] - The management fee for the Aerospace ETF Tianhong is 0.50%, and the custody fee is 0.10%, making it one of the lowest in comparable funds [3] Group 4 - As of May 30, 2025, the top ten weighted stocks in the CN5082 index account for 52.51% of the total index, with companies like Guoke Technology (002625) and AVIC Shenyang Aircraft (600760) among the leaders [3]

Investment Rating - The report maintains a "Positive" outlook on the Chinese defense and military industry [5] Core Insights - The military trade is expected to become a second growth curve for the industry, with Indonesia considering the procurement of Chinese J-10 fighter jets due to their high performance and cost-effectiveness [27] - The report highlights that the recent geopolitical tensions have increased military spending globally, creating new opportunities for China's military exports [6][27] - The domestic aviation industry is expected to accelerate the development of indigenous engines due to U.S. export restrictions on commercial engines [6] Summary by Sections Market Trends - The defense and military industry index rose by 0.41% during the week, underperforming compared to the Shanghai Composite Index, which increased by 1.13% [10][11] - The defense and military industry ranked 24th out of 31 sectors in terms of weekly performance [13] News and Announcements - Indonesia is evaluating the feasibility of purchasing Chinese J-10 fighter jets to modernize its air force while considering budget constraints [27] - The U.S. has restricted the export of key technologies, which is expected to accelerate the domestic development of aviation engines in China [6] - The report notes that military trade could drive performance in various segments of the supply chain, including core subsystems and components [6] Investment Recommendations - The report suggests focusing on upstream components and key materials, highlighting specific companies such as Zhihua Technology, Aerospace Electric, and Xibu Superconductor for potential investment [6]

Industry Investment Rating - The industry investment rating is "Outperform the Market" and is maintained [2] Core Viewpoints - The report highlights the increasing production and delivery of China's C919 passenger aircraft, with an expected annual production capacity of 75 units by 2025 and 200 units by 2029 [6] - The C919 aircraft has achieved over 50% domestic production rate, although key components like engines and avionics still rely on foreign suppliers [7] - The report emphasizes the importance of domestic supply chain security for aviation materials, predicting a shift towards domestic production of critical systems and high-value components [9] Summary by Relevant Sections Industry Basic Situation - The closing index is at 1508.79, with a 52-week high of 1712.48 and a low of 1113.62 [2] Recent Developments - The U.S. has suspended the sale of certain technologies to Chinese companies, impacting the development of the C919 aircraft [5] - The report notes that the CJ-1000A engine development is progressing better than expected, which is crucial for the C919's future [9] Market Performance - The relative performance of the defense and military industry shows a fluctuating trend, with a peak increase of 32% observed from June 2024 to June 2025 [4]

Group 1 - The core viewpoint of the article highlights the significant growth in investment and financing activities within the Chinese aviation engine industry, particularly in 2024, where financing amounts reached 586 million yuan with 15 events, indicating an increasing demand for capital support [1][3][6] - The aviation engine industry is undergoing a transformation phase, with fluctuations in single financing amounts, which generally range from several million to several billion yuan. In 2024, the single financing amount slightly decreased to 40 million yuan but rebounded to 90 million yuan in 2025, reflecting diverse financing needs across different project scales and development stages [3][6] - The financing structure of the aviation engine industry is diverse, with a significant focus on early-stage financing, particularly angel and A-round investments, which accounted for 17 and 21 events respectively. This indicates strong investor interest in startups and confidence in the industry's long-term development [6][12] Group 2 - The majority of financing activities are concentrated in technology research and production, with a notable emphasis on aviation engine components and research. From 2023 to 2025, the main financing events in the industry reflect this trend [7][10] - Mergers and acquisitions in the aviation engine industry primarily focus on horizontal integration, with over 45% of events categorized as such. This strategy aims to enhance market share and competitive advantage through collaboration among similar enterprises [12][16] - Recent investment activities by representative companies in the aviation engine sector indicate a trend towards integrating technology and capital, which can enhance operational efficiency and market competitiveness [16][18]

Group 1 - The aerospace and aviation industry index (CN5082) has shown a slight increase of 0.25% as of June 6, 2025, with notable gains in stocks such as AVIC Shenyang Aircraft (600760) up by 1.67% and AVIC Xi'an Aircraft (000768) up by 1.22% [1] - The Aerospace ETF (159227) has also increased by 0.20%, with a latest price of 1.01 yuan, and has ranked in the top third among comparable funds over the past week [1] - The trading volume for the Aerospace ETF reached 20.76 million yuan with a turnover rate of 8.39%, indicating active market participation [1] Group 2 - According to AVIC Securities, themes such as low-altitude economy, commercial aerospace, deep-sea technology, large aircraft, and military intelligence have been highly active since the beginning of the year, suggesting a potential for continued development and performance improvement in the military industry [2] - The top ten weighted stocks in the aerospace and aviation industry index as of May 30, 2025, include Guangqi Technology (002625) and AVIC Shenyang Aircraft (600760), collectively accounting for 52.51% of the index [2]

Group 1 - The AES100 engine has received a production license and signed sales contracts, marking its transition from design and development to mass production [1][2] - The AES100 engine is China's first 1000 kW class advanced civil turboshaft engine developed according to international airworthiness standards, overcoming over 200 key technologies [1] - The engine features high safety, good economy, easy maintenance, and wide environmental adaptability, suitable for 5-6 ton dual-engine helicopters and 3-4 ton single-engine helicopters, as well as tilt-rotor aircraft [1] Group 2 - The signing of sales and leasing contracts with the United Aircraft Group indicates plans to deliver the AES100 engine by 2026, which will serve as the core power unit for the 6-ton tilt-rotor unmanned transport platform "Lan Ying R6000" [2] - The achievement of a production license signifies that China has the capability to independently develop and produce advanced civil turboshaft engines, establishing a complete supply chain and industrial chain for civil turboshaft engines [1]