Investment Rating - The report maintains a positive outlook on the military industry, emphasizing investment opportunities related to the upcoming military parade, military trade, industry recovery, and the new combat capabilities outlined in the "14th Five-Year Plan" [5][51]. Core Insights - The report identifies four main investment themes: the upcoming military parade commemorating the 80th anniversary of the victory in the Anti-Japanese War, the acceleration of China's military trade, the anticipated recovery in industry prosperity, and the focus on new combat capabilities during the "14th Five-Year Plan" [2][11][19]. - Historical data shows that previous military parades in 2015 and 2019 led to significant excess returns in the military sector, with maximum absolute returns of 84.8% and 46.0%, respectively [3][21][30]. - Recent geopolitical events, such as the India-Pakistan conflict, have increased military trade demand and highlighted the performance of Chinese military equipment, further boosting the military sector's market value [4][35][37]. Summary by Sections Investment Logic - The report highlights the significance of the military parade on September 3, 2025, which will showcase advanced military technologies, including unmanned systems and cyber warfare capabilities, potentially catalyzing the military sector's growth [2][11]. - It notes the increasing profitability of Chinese military enterprises as military trade expands, with gross margins of key players like North Industries and AVIC showing promising trends compared to their U.S. counterparts [2][13]. - The report anticipates a sustained high level of orders for military enterprises in the second half of the year, indicating a positive industry outlook [2][15]. Historical Review - The report reviews the performance of the military sector during the 2015 and 2019 parades, noting substantial returns driven by market enthusiasm for military capabilities [3][21][30]. - It emphasizes that the military sector has consistently outperformed broader market indices during these periods, indicating a strong correlation between military events and stock performance [3][30]. Major Industry Events - Key events such as the announcement of the military parade, the India-Pakistan conflict, and various military exhibitions have significantly impacted the military sector's stock performance, with notable increases in index values following these announcements [4][32][38]. - The report details how the military sector has gained traction through various promotional activities and media coverage, enhancing public interest and investment potential [4][44]. Investment Recommendations - The report suggests focusing on military-related stocks that are likely to benefit from the upcoming parade, military trade opportunities, and advancements in new combat capabilities [5][51].

Core Viewpoint - The A-share market has seen a collective rise in major indices, with a notable surge in the military industry sector driven by strong performance and upcoming events [1][3]. Group 1: Market Performance - The three major A-share indices closed higher, with the Shanghai Composite Index up by 0.66%, the Shenzhen Component Index up by 0.46%, and the ChiNext Index up by 0.5%, with over 3,800 stocks rising [1]. - The military equipment sector experienced significant gains, with stocks like Hengyu Xintong, Beifang Changlong, and Aileda reaching their daily limit up [3][5]. Group 2: Upcoming Events and Catalysts - The upcoming military parade on September 3, commemorating the 80th anniversary of the victory in the War of Resistance Against Japan, is expected to showcase new domestic military equipment, including drones and hypersonic weapons [9][21]. - The recent unveiling of drone swarm and robotic combat capabilities has attracted attention, indicating advancements in military technology [6][9]. Group 3: Industry Trends and Data - The military industry is experiencing a significant transformation, with the military index achieving three consecutive monthly gains, reflecting a robust market environment [10][11]. - The military sector's transaction volume reached a historical high of 1.5272 trillion yuan in the previous month, accounting for over 4% of the total transaction volume in the market for three consecutive months [11]. - The military trade export data shows a 56.48% increase from the previous decade, with aircraft exports rising by 44.65% and air defense weapon exports increasing by over 450% [14]. Group 4: Investment Insights - The military sector is expected to see a recovery in demand, with a notable increase in military orders and a positive outlook for the second half of the year [21][22]. - The aerospace sector is becoming a focal point for investment, with leading companies like AVIC Shenfei seeing increased fund holdings, indicating strong investor interest [19][22]. - The National Aerospace ETF has attracted significant capital inflow, with a total of over 600 million yuan in net inflow over five days, reflecting heightened investor interest in the aerospace sector [22].

Core Viewpoint - The article emphasizes the importance of national defense awareness and the role of the military in society, highlighting the activities and discussions held during the military day event in Nanjing, which aims to strengthen the relationship between the military and the civilian population [1][2]. Group 1 - The military day event included theoretical learning, national defense education, and discussions to reinforce national defense awareness and the responsibility of the party in managing armed forces [1]. - The Nanjing military culture museum showcased a special exhibition themed "Military and Civilian Unity, Glory Together," illustrating heartwarming stories of military-civilian cooperation throughout history [1]. - Attendees watched a report on the achievements of the militia construction during the 14th Five-Year Plan period, highlighting the contributions of various military units and individuals [1]. Group 2 - The military meeting reviewed important discussions by General Secretary Xi Jinping regarding national defense and military construction, emphasizing the need for a strong military aligned with the people's interests [2]. - The meeting identified this year as crucial for achieving the centenary goals of the military, advocating for the implementation of Xi Jinping's strong military thought and enhancing the city's defense mobilization and reserve force construction [2]. - The meeting stressed the importance of grassroots military construction, focusing on militia team development and improving the quality and effectiveness of local armed forces [2].

Core Viewpoint - The meeting emphasized the importance of enhancing military-civilian relations and achieving high-quality development in the dual-support work, aiming for the "Eleventh Consecutive Crown" as a national dual-support model city [1][2]. Group 1: Political and Strategic Importance - The dual-support work is recognized as a significant political task that requires a strategic and systematic approach to strengthen military-civilian unity [1][2]. - The city has achieved the honor of being a national dual-support model city for ten consecutive years, reflecting its commitment to serving national defense and military construction [1]. Group 2: Support for Military and Families - The meeting highlighted the need to support military reforms and better serve the needs of military personnel, including addressing issues related to education, employment, and elder care for their families [2]. - Emphasis was placed on providing solid support for veterans' resettlement, employment, and welfare, ensuring that military families feel honored and valued [2]. Group 3: Community Engagement and Development - The meeting called for creating a strong atmosphere of military support within the community, enhancing the honor and sense of belonging for military personnel and their families [2]. - It was noted that military units should actively participate in local economic and social development, contributing to public safety and rural revitalization efforts [2].

Group 1 - The meeting emphasized the importance of enhancing the atmosphere of supporting the military and the political responsibility of caring for military construction and reform [1][2] - The government aims to promote dual-support work with high-quality development to better serve national defense and military modernization [1] - The meeting highlighted the need for a coordinated mechanism to improve support for military operations, including logistics and training site assistance [2] Group 2 - The government plans to conduct extensive dual-support publicity and education activities, utilizing platforms like memorial halls and squares [2] - There is a focus on reducing the concerns of military personnel by providing thoughtful service and support [2] - The government encourages military participation in local economic and social development, contributing to key projects and community safety [2]

Investment Rating - The report gives a "Buy" rating for the company, marking its first coverage [1]. Core Views - The company is expected to benefit from three main factors: the military radar business may gain from the acceleration of new combat capabilities; the Chinese military trade market is on the rise, which the company may continue to benefit from; and there is a focus on the company's low-altitude layout [7][10]. Financial Summary - Total revenue projections for the company are as follows: 2024A: 218 million, 2025E: 1,077 million, 2026E: 1,345 million, 2027E: 1,616 million, with significant growth rates expected [2]. - The net profit attributable to shareholders is projected to be: 2024A: -78 million, 2025E: 126 million, 2026E: 175 million, 2027E: 243 million, indicating a recovery from losses in 2024 [2]. - Earnings per share are expected to improve from -0.23 in 2024 to 0.72 in 2027 [2]. Company Overview - The company is a leading entity in China's air defense early warning radar sector, with its main products including air defense early warning radars, radar supporting equipment, and radar components [6][20]. - The company has a low debt ratio, with an asset-liability ratio of 17.9% as of Q1 2025, indicating a strong financial position [34]. Market Position - The company is positioned as one of the main manufacturers of air defense early warning radars in China, with a significant market share in military radar production [20][23]. - The company has seen a notable increase in military trade revenue, which rose from approximately 3% in 2022 to 15% in 2023 [10][11]. Product and Technology - The company has developed a range of low-altitude detection products, including low-altitude safety control systems and various low-altitude detection radars, which have already received bulk orders from users [10][26]. - The company’s radar products are crucial for modern military operations, providing essential information for air defense and combat systems [40][42].

Summary of Military Industry Conference Call Industry Overview - The military industry is experiencing significant investment opportunities due to global geopolitical tensions and an arms race, particularly highlighted by China's military equipment performance in the India-Pakistan air conflict, which has increased international recognition of Chinese military products [1][2]. Key Points and Arguments - **Investment Opportunities**: The military sector is expected to benefit from increased order delivery tolerance from institutions, driven by geopolitical tensions and high-end equipment exports [1][2]. - **Market Events**: The upcoming 93rd anniversary military parade is anticipated to boost market activity, alongside the conclusion of the 14th Five-Year Plan and the initiation of the 15th plan, which may lead to expedited orders [3][5]. - **Performance Metrics**: In the first half of 2025, the defense industry index outperformed the broader market, driven by a reversal in industry sentiment and concentrated order issuance [1][10]. - **Valuation Trends**: The military industry's valuation has risen to the 75th percentile, indicating potential for further growth, shifting from EPS-driven to PE-driven factors due to increased global asset allocation demand [8][21]. - **Contract Liabilities**: A 12.7% increase in contract liabilities in Q1 2025 suggests a pre-order phenomenon, indicating future performance improvements [11][9]. Important but Overlooked Content - **Geopolitical Context**: The ongoing geopolitical tensions, including conflicts in Ukraine and the Middle East, are expected to sustain demand for military equipment, with countries like South Korea and Japan increasing their defense budgets [19][16]. - **Technological Advancements**: The military sector is focusing on new combat capabilities, including unmanned systems and high-speed weapons, which are crucial for future military strategies [7][29]. - **Investment Recommendations**: Key investment areas include military trade exports, military electronics, and ammunition, with specific companies highlighted for their potential [5][30][31]. Future Outlook - The military industry is poised for continued growth, driven by strategic security asset allocation and the global expansion of Chinese military assets, particularly in the arms trade [21][22]. - The upcoming 15th Five-Year Plan is expected to clarify future directions for the military sector, enhancing market confidence and potentially leading to increased order flows [15][13]. This summary encapsulates the critical insights from the military industry conference call, highlighting the current landscape, investment opportunities, and future trends.

Core Points - The establishment of the Information Support Force Engineering University in Wuhan is a significant event for Hubei's strategic development [1][2] - The university's creation reflects the central government's commitment to strengthening military capabilities and supporting local development [2] Group 1 - The university's headquarters is located in Wuhan, which is part of Hubei's efforts to become a key strategic hub in central China [2] - Hubei has a rich historical and cultural background, contributing to its potential for innovation and military support [2] - The province boasts a strong educational foundation with 136 universities and 220 million students, alongside significant industrial capabilities [2] Group 2 - The local government aims to enhance military-civilian cooperation and innovation to support national defense modernization [2] - The establishment of the university is expected to create a new benchmark for service and support for military institutions in the region [2]

Group 1 - The defense and military industry sector is experiencing strong growth, leading the entire market with a net inflow of 6.4 billion CNY, the highest among all industries [1] - The defense military ETF (512810) saw a significant increase, reaching a 2% rise during trading, with key stocks like Construction Industry, Great Wall Military, and North Navigation hitting the daily limit [1] - The trading volume for the defense military ETF reached 119 million CNY by 10:50 AM, surpassing the total trading volume of the previous day and marking a new high in nearly a month [1] Group 2 - The geopolitical tensions are driving a rapid increase in global military spending, which is expected to significantly boost the demand for military trade, particularly for Chinese military enterprises [2] - The military trade sector is anticipated to experience historic opportunities, with China's equipment system demonstrating its advanced capabilities during conflicts, positioning it for growth [3] - The "dual new quality" driving high growth includes advancements in intelligent, systematic, and informational combat capabilities, which are becoming critical in global strategic competition [3] Group 3 - The defense military ETF (512810) has lowered its trading threshold from approximately 120 CNY to around 60 CNY, making it more accessible for investors to capitalize on opportunities in the defense sector [4] - The ETF passively tracks the China Securities Military Index, combining traditional and new military capabilities, and serves as an efficient tool for investing in the defense military sector [3]

Group 1 - The core viewpoint of the news highlights the upcoming military parade on September 3 in Tiananmen Square, showcasing the restructured military capabilities and advanced equipment such as unmanned systems and underwater combat technologies [1] - The 55th Paris Air Show featured the China Aviation Industry Corporation presenting 30 key products, including the J-20 and J-35A, with the J-35A making its first overseas appearance [1] - The AG600 amphibious aircraft received its production license on June 11, marking a significant milestone in China's emergency rescue aviation equipment development [1] Group 2 - According to Zheshang Securities, the defense and military industry is expected to reach a turning point in 2025, with military trade set to drive growth and valuation expansion [1] - The global arms race is opening up external demand, and China's market share is anticipated to increase significantly due to cost-effectiveness and combat capabilities [1] - The military sector is expected to recover from negative impacts such as personnel adjustments, order delays, and supply chain price reductions, with 2025 marking the end of the 14th Five-Year Plan and a return to growth for equipment [1] Group 3 - The aviation equipment sector is projected to benefit from the release of new military aircraft, with military trade providing development opportunities [1] - The domestic and foreign demand for aviation engines is expected to drive growth, supported by the recovery of the global civil aviation market [1] - China has largely achieved domestic production of military aircraft engines, and the development of commercial high-bypass ratio engines is progressing smoothly, with the low-altitude economy significantly boosting demand for general aviation power [1]