Core Viewpoint - The article highlights the significant geopolitical tensions in the Middle East, particularly the recent military actions between Israel and Iran, which have implications for global security and economic conditions. It suggests that these developments may lead to increased opportunities in China's military trade sector, particularly in aerospace and defense industries. Group 1: Market Performance - On June 17, A-shares experienced a collective decline, with the Shanghai Composite Index dropping by 0.22% during intraday trading. Sectors such as shipping, engineering machinery, and power generation equipment showed positive performance, while office supplies and leisure goods faced the largest declines [1]. - The aerospace sector faced volatility, with the Aerospace ETF (159227) declining by 0.97% during intraday trading. Key stocks such as AVIC Chengfei, Aerospace Rainbow, and Yaguang Technology fell by 3%, while Aero Engine Corporation of China saw a 2% increase [1]. Group 2: Geopolitical Context - On June 13, Israel launched a large-scale airstrike, codenamed "Lion's Strength," involving over 200 aircraft, including F-35 stealth fighters, targeting Iran's Natanz nuclear facilities and personnel. In retaliation, Iran fired approximately 150 ballistic missiles and drones at Israeli cities such as Tel Aviv and Haifa, marking a significant escalation in the "shadow war" between Israel and Iran [1]. - The ongoing conflicts in regions such as Russia-Ukraine, Israel-Palestine, India-Pakistan, and Israel-Iran are contributing to a major shift in global dynamics, with increased risks of nuclear proliferation and proxy conflicts [1]. Group 3: Investment Opportunities - According to Zhongyou Securities, the current geopolitical landscape presents unprecedented opportunities for China's military trade sector. The focus is on new technologies that enhance equipment performance or reduce costs, as well as new market directions arising from military trade and the conversion of military technology [1]. - The Aerospace ETF tracks the Guozheng Aerospace Index, which has a high concentration of core companies in China's military industry, covering new sectors such as large aircraft and low-altitude economy. The military industry accounts for 99.2% of the index, with a higher representation in aerospace and defense equipment compared to other indices [2].

Core Viewpoint - The upcoming 55th Paris Air Show in June 2025 will showcase China's significant advancements in aviation technology, marking its transition from a "follower" to a "leader" in the global aerospace industry [1]. Group 1: Military Aircraft Segment - The J-20, China's first fifth-generation stealth fighter, will enhance international market confidence with its supercruise capability and advanced information warfare capabilities [3]. - The J-35A, a multi-role stealth fighter, is designed to meet both air force and navy needs, showcasing advanced radar and infrared control technologies [4]. - The Y-20 strategic transport aircraft and Z-20 utility helicopter highlight China's global competitiveness in strategic airlift and general aviation [6]. Group 2: Unmanned Aerial Vehicles (UAVs) - The Attack-11, a stealth unmanned combat platform, is positioned as a new favorite in the high-end UAV market, reflecting China's strategic focus on unmanned systems [7]. - The Wing Loong series, particularly the Wing Loong-2H, has proven its effectiveness in various regions, enhancing its appeal in the global military trade market [8]. - The Xunhe series of small UAVs, such as the Xunhe-500W, demonstrates versatility in emergency rescue and agricultural monitoring applications [9]. Group 3: Civil Aviation Segment - The AG600M, the world's largest amphibious aircraft, is set to enhance China's international emergency rescue capabilities [10]. - The AC352, a product of Sino-French collaboration, targets the growing civil helicopter market in Southeast Asia and Africa, emphasizing comfort and cost-effectiveness [11]. Group 4: Market Insights - The global military trade delivery total is projected to exceed $120 billion in 2024, with aviation equipment accounting for over 40% of this market [13]. - China's military equipment is known for its cost-effectiveness, and recent advancements in stealth and information warfare technologies are enhancing its competitive edge [14]. - China's military industrial cooperation has evolved from merely exporting weapons to technology collaboration and production line licensing, as seen in projects with Pakistan and Indonesia [15]. Group 5: Future Outlook - The Paris Air Show represents a starting point for opportunities, supported by China's "14th Five-Year Plan" for high-end manufacturing and the transition in military trade from quantity to quality [18]. - Future advancements will focus on sixth-generation fighters, hypersonic vehicles, and intelligent unmanned systems to secure a leading position in next-generation aviation technology [19]. - The reliability and brand recognition of Chinese equipment are expected to open new markets in both traditional and emerging regions [20]. - The internationalization of civil aircraft like the AG600M and AC352 indicates a shift towards military-civilian integration, with potential growth in large aircraft and low-altitude economy sectors [21].

欧洲主要股指开盘普跌，截至发稿，欧洲斯托克50指数、德国DAX30指数、法国CAC40指数均跌超1%。 美股盘前交易时段，三大股指期货普遍下跌，标普500期货小型、纳斯达克100期货小型，道琼斯期货小型均跌超1%。 | < W | 纳斯达克100期货小型 | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | NQ.CME | | | | | | | | 21657.25 ª€ | | | 21932.50 | 总手 | | 11.28万 | | | -275.25 | -1.25% 升益 | | 21909.00 | 现手 | | 1 | | | 最高价 | 21915.75 | 仓 持 | 26.78万 | 外 盘 | | 5.39万 | | | 最低价 | 21471.00 | 增 仓 | 2445 | 内 盘 | | 5.88万 | | | 结算价 | 21932.50 | 估结算 | | 基 差 | | 0.00 | | | 分时 | 五日 | 日K | 周Ｋ | 月Ｋ | 电子 | (0) | | | 晉加 | | | ...

Group 1 - The core viewpoint of the articles highlights the recovery of the aerospace and defense industry in China, with a focus on military trade as a potential growth driver [1][2] - The AG600 amphibious aircraft has received production certification from the Civil Aviation Administration of China, marking its entry into mass production [1] - The aerospace ETF Tianhong closely tracks the CN5082 index, which reflects the overall performance of the aerospace and defense sector [2] Group 2 - The CN5082 index saw a slight decline of 0.32% as of June 11, 2025, with mixed performance among constituent stocks [1] - The top ten weighted stocks in the CN5082 index account for 52.51% of the index, indicating a concentration of investment in key players [3] - The Tianhong aerospace ETF has the lowest management fee rate of 0.50% and a tracking error of 0.286%, showcasing its competitive positioning [2]

Group 1 - The A-share market experienced a collective decline on June 10, with major technology sectors also retreating. The aerospace ETF Tianhong (159241) fell by 2.02%, with a turnover rate exceeding 12% and active trading. The premium trading was noted with a premium rate of 0.10 [1] - The Tianhong aerospace ETF closely tracks the Guozheng Aerospace Index, which has over 99% weight in the defense and military industry. The core sectors of aerospace equipment and aviation equipment account for 73% of the index, focusing on key areas such as large aircraft manufacturing, low-altitude economy, and commercial aerospace [1] - Recent news indicates significant developments in military trade, with Indonesia evaluating the feasibility of purchasing Chinese-made J-10 fighter jets to enhance its air force's modernization while considering budget efficiency [1] Group 2 - According to Xinyu Securities, military trade is a crucial driver for the demand in China's military industry, with a clear upward trend expected over the next 5-10 years. This theme is anticipated to remain active as a key investment direction within the military sector [1] - Shenwan Hongyuan noted that advancements in military trade equipment will significantly enhance industry valuation and the performance of related listed companies. With the upcoming semi-annual reports and the gradual implementation of the "14th Five-Year Plan," the military industry is expected to rise, with June identified as an optimal time for attention [2]

Summary of Key Points from Conference Call Records Industry Overview - The military trade industry is experiencing a potential revaluation of military industrial capacity, driven by countries like Indonesia and Pakistan evaluating and purchasing advanced military aircraft from China, such as the J-10 and J-35 fighters [1][2][3]. Core Insights and Arguments - **Indonesia's Military Procurement Strategy**: Indonesia is assessing the purchase of Chinese J-10 fighter jets to balance its defense budget and performance needs, especially after the underperformance of French Rafale jets during the India-Pakistan conflict [1][3]. - **Performance of Chinese Military Equipment**: During the India-Pakistan conflict, the J-10 successfully shot down multiple Indian aircraft, showcasing its superior performance and validating the capabilities of China's fourth-generation fighters [5]. - **Shift in China's Military Exports**: China is transitioning from exporting older weaponry to developing and exporting high-end military equipment, such as the Hongqi-22 and advanced fighter jets like the J-10, J-20, and J-35, which are expected to enhance China's position in the international military trade market [1][6]. - **Advantages of the J-35**: The J-35 is highlighted for its high cost-performance ratio, technological independence, and complete domestic production, positioning it similarly to the U.S. F-35, which has received substantial orders [7][8]. - **Profitability in Military Trade**: Manufacturers in the military trade sector can enjoy significant premiums, leading to improved profitability compared to domestic sales, where profit margins are generally lower [9]. - **Importance of UAVs and Radar Systems**: The Ukraine conflict has underscored the strategic value of UAVs and radar systems, demonstrating their effectiveness in modern warfare [10][11]. Additional Important Insights - **Global Ammunition Industry Growth**: The global ammunition industry is in a phase of increasing demand, with significant growth in construction projects and fixed assets, indicating a potential boom in the sector [19]. - **Safety in Explosive Production**: Recent accidents in the nitrocellulose industry highlight the urgent need for safety improvements in explosive production, which is critical for both civilian and military applications [18]. - **Investment Opportunities in Military Technology**: There are substantial investment opportunities in low-cost precision-guided munitions and automation in the ammunition production process, driven by increased demand and the need for efficient supply chains [12][20]. - **Domestic Military Enterprises**: Major state-owned military enterprises are focusing on expanding their capabilities in the ammunition sector, with listed companies like Beihua Co. and Great Wall Military Industry being key players [21]. Conclusion - The evolving geopolitical landscape, particularly the India-Pakistan conflict and the Ukraine war, is accelerating the international expansion of China's high-end military equipment, which is expected to enhance the growth potential of the military industry and lead to a revaluation of military assets [22][23].

Industry Investment Rating - The industry investment rating is "Outperform the Market" and is maintained [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 [10][14] - China's military trade currently accounts for 5.9% of the global military trade market, significantly lower than the US at 43% and Russia at 9.6% [12][14] - The military industry is anticipated to see an inflection point in orders as it enters the second half of the "Centenary Goal of Building a Strong Army" by 2025, with new technologies and products expected to create new market directions [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. Investment Suggestions - Two main investment themes are suggested: 1. Aerospace and "gap-filling" new focuses, including companies like Feilihua, Fenghuo Electronics, and AVIC Shenfei [14] 2. New technologies, products, and markets with greater elasticity, including companies like Aerospace Intelligent Manufacturing and Guangdong Hongda [14] 3. Market Performance - The military industry index saw a slight increase of 0.07%, while the broader market indices showed higher gains, indicating a relatively weaker performance in the military sector [16] - The top ten performing stocks in the military sector this week included Xinguang Optoelectronics (+10.62%) and Huawu Co., Ltd. (+9.71%) [18] 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 [21] - Historical data shows that 79.75% of the time since January 1, 2014, the PE-TTM valuation has been lower than the current level [21] 5. Data Tracking - Recent data tracking includes information on private placements and stock incentive plans for various military companies, indicating active capital movements within the sector [24][26]

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]

Investment Rating - The report maintains a "Positive" investment rating for the defense and military industry [5]. Core Insights - The military trade is expected to lead to a revaluation of military industrial capacity and value [1]. - The report highlights the increasing demand for Chinese military equipment due to recent international conflicts, particularly the India-Pakistan conflict, which has showcased the performance of Chinese aircraft [25][29]. - The report emphasizes the transition of China's military trade into a new era characterized by high-quality self-developed equipment, moving away from reliance on imported Soviet-style equipment [46]. Summary by Sections Section 1: Military Trade Opportunities - Indonesia is considering the procurement of Chinese J-10 fighter jets, driven by performance in the India-Pakistan conflict and cost-effectiveness compared to Western counterparts [14]. - Pakistan is also looking to acquire various advanced Chinese military equipment, including J-35 fighter jets and HQ-19 air defense systems, following successful military engagements [19][25]. Section 2: Next-Generation Aircraft - The U.S. has announced the development of the F-47 next-generation fighter jet, which may create competitive pressure for Chinese manufacturers like AVIC [61]. - The report discusses the potential of the J-35 to become a military trade hit, comparable to the F-35, due to its lower cost and advanced capabilities [41]. Section 3: Military Equipment Production and Safety - The report highlights the urgent need for upgrades in the production safety of energetic materials, citing frequent accidents in the industry [96]. - The complexity and risks associated with the production of explosives and ammunition are noted as significant challenges, particularly in the context of increasing demand during conflicts [100][105]. Section 4: Industry Growth and Investment Opportunities - The military trade sector is expected to benefit from increased demand and pricing, with primary manufacturers likely to see significant profit improvements [52]. - The report suggests focusing on companies with popular or potentially popular military models, such as AVIC subsidiaries and missile manufacturers [55].

Investment Rating - The report maintains an "Outperform" rating for the defense and military industry [5]. Core Insights - NATO is expected to increase defense budgets, presenting new opportunities for military trade, particularly for China [2][35]. - The defense industry is poised for long-term growth, with recovery in demand and a clear roadmap for modernization by 2035 and 2050 [3][36]. - The low-altitude economy is gaining attention, supported by recent policies and strategic partnerships, indicating a potential growth area [31][34]. Summary by Sections Market Review - The Shenwan Defense and Military Index fell by 1.18%, ranking 30th among 31 sectors [1][13]. - The PE (TTM) ratio for the defense sector is 74.26, with aerospace equipment at 133.63 and ground armaments at 138.63 [19][27]. Key Recommendations - Focus on downstream manufacturers such as Hongdu Aviation and AVIC Shenyang Aircraft [4]. - Highlight new technologies in military applications, including companies like Lianchuang Optoelectronics and Guangqi Technology [4]. - Emphasize underwater equipment and missile industry chains, with key players like Hailanxin and Guokai Military Industry [4]. Industry Dynamics - The global military trade market is expected to grow due to increased defense spending, particularly in NATO countries [2][35]. - China's military trade exports are anticipated to rise, benefiting from geopolitical tensions and a competitive edge in weaponry [41][39].