Investment Rating - The report maintains a "Positive" investment rating for the industry [2]. Core Viewpoints - The report emphasizes the importance of military trade equipment, particularly focusing on aviation engines, which hold a primary position in military exports. The long-tail effect of high-value consumables drives asset duration [6][8]. - The J-35 model from AVIC Shenyang Aircraft Corporation is highlighted for its strong domestic and foreign demand, comparable to the U.S. F-35 in multi-purpose attributes [36][39]. - The report anticipates significant growth in the military aviation engine aftermarket, estimating a market space exceeding 400 billion yuan over the next 20 years, with an average annual value of 21.44 billion yuan [23][24]. Summary by Sections Section 1: Aviation Engine Market - Aviation engines are categorized as high-value consumables, with long-term replacement and maintenance needs driven by the existing aircraft market [13]. - The report cites that from 2014 to 2018, aviation engines accounted for 3.6% of global military trade orders, which decreased to 2.0% from 2019 to 2023. However, the share of aircraft in military trade orders increased from 44.08% to 50.09% during the same period [12][11]. - The aftermarket for military aviation engines is projected to be around 428.74 billion yuan over the next 20 years, with a significant portion attributed to maintenance and replacement needs [23][24]. Section 2: AVIC Shenyang Aircraft Corporation - The J-35 model is positioned against the U.S. F-35, with strong demand anticipated both domestically and internationally [36][39]. - The report notes that the F-35 has significantly outperformed the F-22 in terms of order volume, with 3,497 units ordered compared to the F-22's 195 units [39][94]. Section 3: Investment Strategy - The report suggests a focus on companies that enhance product strength, penetration rates, and average transaction values, particularly in the context of the 14th Five-Year Plan [97]. - Key investment targets include companies involved in missile production, unmanned systems, and military AI, with specific recommendations for firms like Aerospace Electric and Feilihua [97].