Core Viewpoint - The military industry sector is experiencing renewed activity, particularly in aerospace and defense, driven by geopolitical tensions and increased domestic military spending [1] Group 1: Market Activity - As of June 13, the aerospace ETF (159227) rose by 0.7% with a trading volume of 14.81 million yuan, leading its category [1] - Key stocks in the ETF, including drones, Tianhe Defense, Andavil, Aerospace Rainbow, and China Ordnance, showed significant gains [1] Group 2: Long-term Outlook - The global geopolitical landscape is unstable, suggesting that defense spending will likely maintain a high growth rate [1] - The aerospace sector is expected to benefit directly from the focus on air and space threats in modern warfare [1] Group 3: Industry Insights - The aerospace ETF (159227) tracks the Guozheng Aerospace Index, which has over 99% weight in the military industry, with aerospace and aviation equipment comprising 73% of the index [1] - According to Zhongyou Securities, by 2025, the military industry is anticipated to reach a turning point in orders, driven by new technologies and products aimed at enhancing equipment performance and reducing costs [1]

Industry Investment Rating - The industry investment rating is maintained at "Outperform the Market" [1] Core Viewpoints - In 2024, the 71 tracked military industry stocks achieved a total revenue of 566.27 billion yuan, a year-on-year growth of 0.76%, while the net profit attributable to shareholders decreased by 26.24% to 23.90 billion yuan, primarily due to a decline in overall gross margin [4][20] - The shipbuilding sector showed significant performance growth, with a revenue of 190.05 billion yuan, up 11.25%, and a net profit of 6.55 billion yuan, up 115.10% [4][37] - The total contract liabilities for the 71 military stocks reached 198.56 billion yuan at the end of 2024, a year-on-year increase of 5.91% [5][58] Summary by Sections 1. Military Industry Performance in 2024 - The overall performance of the military industry in 2024 showed a slowdown in revenue growth and profit pressure, with a total revenue of 566.27 billion yuan and a net profit of 23.90 billion yuan [20] - The overall gross margin for the 71 military stocks was 17.67%, down 1.80 percentage points year-on-year [23] 2. Q1 2025 Performance Analysis - In Q1 2025, the 71 military stocks reported a total revenue of 106.75 billion yuan, a decrease of 3.15% year-on-year, and a net profit of 5.61 billion yuan, down 4.40% [6][19] - The shipbuilding sector led the growth with a revenue of 40.99 billion yuan, up 9.81%, and a net profit of 2.05 billion yuan, up 232.11% [6][38] 3. Valuation and Index Performance - As of April 30, 2025, the military industry index had decreased by 4.21%, with a PE-TTM valuation of 96.49 times and a PB valuation of 3.27 times [7][49] - Historically, 74.88% of the time since January 1, 2014, the military sector's PE-TTM valuation has been below the current level [7] 4. Investment Recommendations - The report suggests focusing on two main investment themes: the ongoing demand for aerospace and the new technologies, products, and markets that may offer greater elasticity [10][11] - Key companies to watch include those in the aerospace sector such as AVIC Shenyang Aircraft Corporation and AVIC Xi'an Aircraft Industry Group, as well as companies involved in missile technology and new market opportunities [10][12] 5. Contract Liabilities and Future Outlook - The total contract liabilities for military stocks remained high, with significant increases in the shipbuilding sector [5][60] - The report anticipates a turning point in military orders as the "Centenary of the Army Building" goals progress, indicating potential growth in the military industry [8]

Industry Investment Rating - The industry investment rating is "Outperform the Market" and is maintained [1] Core Viewpoints - In 2024, the 71 tracked military industry stocks achieved a total revenue of 566.27 billion, a year-on-year growth of 0.76%, while the net profit attributable to shareholders was 23.90 billion, a decrease of 26.24% [4][20] - The decline in profit is primarily attributed to a decrease in overall gross margin, which was 17.67%, down by 1.80 percentage points year-on-year [4][23] - The shipbuilding sector showed significant performance growth, with a revenue of 190.05 billion, up 11.25%, and a net profit of 6.55 billion, up 115.10% [4][37] Summary by Sections 1. Military Industry Performance in 2024 - The overall performance of the military industry in 2024 showed a slowdown in revenue growth and profit pressure [20] - The total gross profit for the 71 military stocks was 100.08 billion, a decrease of 8.53% year-on-year [21] - The overall four expense rate for the 71 military stocks was 12.24%, a slight decrease of 0.07 percentage points [26] 2. Q1 2025 Performance Analysis - In Q1 2025, the 71 military stocks reported a total revenue of 106.75 billion, a year-on-year decrease of 3.15%, and a net profit of 5.61 billion, down 4.40% [6][19] - The shipbuilding sector led in growth, achieving a revenue of 40.99 billion, up 9.81%, and a net profit of 2.05 billion, up 232.11% [6][38] 3. Contract Liabilities - As of the end of 2024, the total contract liabilities for the 71 military stocks reached 198.56 billion, a year-on-year increase of 5.91% [5][58] - The shipbuilding sector saw a significant increase in contract liabilities, growing by 27.14% to 157.05 billion, while the aviation sector's liabilities decreased by 36.69% [5][60] 4. Investment Recommendations - The report suggests focusing on two main investment themes: the ongoing demand for aerospace and the potential of new technologies, products, and markets [10][11] - Key companies to watch include those in the aerospace supply chain and missile industry, such as AVIC Shenyang Aircraft Corporation and AVIC Heavy Machinery [10][11]

Investment Rating - The industry investment rating is "Outperform the Market" [1] Core Views - As of April 20, 2024, among the 120 tracked defense industry listed companies, 60 have disclosed their 2024 annual reports, with 29 companies showing year-on-year growth in performance, and 12 companies reporting a net profit growth rate exceeding 20%. Notable companies with strong performance include China Shipbuilding Defense, Tianyin Electromechanical, and Aerospace Intelligent Manufacturing [4][12] - For the first quarter of 2025, 9 defense industry companies have released performance forecasts, with companies like China Shipbuilding Defense and China Heavy Industry expected to see year-on-year growth rates exceeding 300% [4][15] - Looking ahead to 2025, the defense industry is expected to experience a turning point in orders, driven by new technologies and products aimed at enhancing equipment performance and reducing costs. Two main investment themes are suggested: the aerospace theme and new technologies/products with greater elasticity [5][16] Summary by Sections Industry Overview - The closing index for the defense industry is 1413.55, with a 52-week high of 1712.48 and a low of 1113.62 [1] Performance Analysis - The defense sector index has seen a decline of 2.79% this week, ranking last among 31 sectors [18] - The top-performing stocks in the defense sector this week include Beimo Gaoke (+11.94%) and Hangya Technology (+9.70%) [20] Company Performance - Key companies and their 2024 revenue and profit growth rates include: - China Shipbuilding Defense: Revenue of 194.02 billion, profit growth of 684.86% - Aerospace Intelligent Manufacturing: Revenue of 77.81 billion, profit growth of 87.02% [14] - For Q1 2025 forecasts, China Shipbuilding Defense is expected to report a profit growth rate of 1103% [15] Valuation Levels - As of April 18, 2025, the defense sector's PE-TTM valuation is 72.84, and the PB valuation is 3.26, both at historical mid-levels [23] Investment Recommendations - Suggested investment themes include: 1. Aerospace and "gap-filling" technologies, with companies like Feiliwa and YF Electronics 2. New technologies and markets with greater elasticity, including Aerospace Intelligent Manufacturing and Guorui Technology [5][16]

Industry Investment Rating - The industry investment rating is "Outperform the Market" and is maintained [2] Core Viewpoints - As of February 28, 2025, among the 120 tracked defense industry listed companies, 87 have disclosed their 2024 performance forecasts, with 24 companies showing positive growth year-on-year [5][13] - The shipbuilding sector is experiencing high growth, with companies like China Shipbuilding Defense, China Heavy Industry, and China Power reporting significant performance increases, with growth rates of 680%, 259%, 65%, and 23% respectively [6][13] - In the aerospace and aviation industry, companies such as AVIC Xi'an Aircraft Industry Group and material suppliers like Zhongjian Technology and Huayin Technology are also maintaining rapid growth, with AVIC Xi'an expected to achieve a net profit of 990 million to 1.076 billion yuan, representing a year-on-year increase of 15% to 25% [7][14] Summary by Relevant Sections Industry Overview - The defense industry is expected to see an inflection point in orders as the "Centenary of the Army Building" mission enters its second half, with new technologies and products aimed at enhancing equipment performance or reducing costs [8][19] Performance Overview - The defense sector's performance is reflected in the recent decline of the CSI Military Industry Index by 3.57%, while the overall market indices also experienced declines [20][21] Company Performance - Among the listed companies, 24 reported positive growth, while 29 showed positive but declining performance, and 28 reported losses with an increase in year-on-year losses [5][13] - Specific companies like AVIC Xi'an and Zhongjian Technology are highlighted for their strong performance forecasts, indicating a robust outlook for the sector [7][14] Investment Recommendations - Two main investment themes are suggested: 1) Aerospace and "gap-filling" new focuses, including companies like Feili Hua, Fenghuo Electronics, and others [8][19] 2) New technologies, products, and markets with greater elasticity, including companies like Aerospace Intelligence, Guorui Technology, and others [8][19] Valuation Levels - As of February 28, 2025, the CSI Military Industry Index stands at 10,288.33, with a PE-TTM valuation of 72.96 and a PB valuation of 3.31, indicating that both valuations are at historical mid-levels [26]