Investment Rating - The report maintains a rating of "stronger than the market" for the defense and military industry [6]. Core Viewpoints - The report expresses a bullish outlook for the military industry, driven by upcoming catalysts such as the September 3 military parade and the 14th Five-Year Plan, despite a slight decrease in the index's growth this week [2][44]. - The military industry is expected to experience strong demand recovery by 2025, supported by both domestic and international growth opportunities [2][44]. - The current price-to-earnings ratio (TTM) for the military index is 74.21, indicating a high configuration value at this time, especially with the anticipated strong recovery in the industry [2][44]. Summary by Sections 1. Weekly Market Review - The military index rose by 0.15% from August 11 to August 15, underperforming the Shanghai and Shenzhen 300 index, which increased by 2.37% [11][16]. - Since the beginning of 2025, the military index has increased by 21.74%, significantly outperforming the broader market [18]. - The aerospace sector showed better performance this week, while the aviation sector faced declines [22][19]. 2. Investment Opportunities - The report recommends focusing on three main lines of investment: domestic trade, foreign trade, and emerging industries [3][44]. - Specific companies to watch in domestic trade include Tianqin Equipment, Gaode Infrared, and others in various segments such as aircraft and engines [3][4][45]. - In foreign trade, companies like Guangdong Hongda and Guorui Technology are highlighted [4][45]. - Emerging industries include nuclear fusion and commercial aerospace, with companies like Guoguang Electric and Aerospace Power being noted [10][46]. 3. Funding and Valuation - There has been a slight decrease in passive fund sizes and shares, with a net outflow of 775 million yuan this week, but leveraged funds have seen significant inflows [28][34]. - The military sector's valuation remains high, with a five-year P/E ratio of 74.21, indicating continued attractiveness for investment [35][44]. - Most companies in the military sector are expected to have valuations below 30 times by 2026, suggesting potential for performance improvement [39][44].

Investment Rating - The industry rating is "Outperform the Market" indicating that the overall return of the industry is expected to exceed the market benchmark index by more than 5% in the next 6 to 12 months [73]. Core Viewpoints - The report maintains a bullish outlook on the military industry, emphasizing that despite recent adjustments, the sector remains attractive for investment. The military industry index has shown resilience, with a slight increase of 0.08% during the week of July 28 to August 1, while the Shanghai Composite Index fell by 1.75%, resulting in an outperformance of 1.83 percentage points [3][43]. - The report highlights a strong demand recovery expected in 2025, driven by various catalysts such as the "14th Five-Year Plan" and the "Centenary of the Army" goals, which are anticipated to significantly boost both domestic and foreign demand [4][43]. - The current price-to-earnings ratio (TTM) for the military industry index is 72.21, placing it in the 98.04 percentile, suggesting a high configuration value at this time [4][43]. Summary by Sections 1. Weekly Market Review - The military industry index ranked 6th among 31 primary industries, with a year-to-date increase of 14.76% compared to a 3.05% rise in the Shanghai Composite Index, resulting in an outperformance of 11.71 percentage points [9][16]. - The information technology sector within the military industry showed the best performance, with significant gains from stocks like New Light Optoelectronics and Northern Long Dragon, which rose by 29.1% and 21.69% respectively [20][22]. 2. Investment Recommendations - The report recommends focusing on four main lines of investment: 1. Domestic Trade: Companies such as Tianqin Equipment, Gaode Infrared, and others in various segments like land equipment and aircraft [4][43]. 2. Foreign Trade: Companies like Guangdong Hongda and Guorui Technology [5][45]. 3. Emerging Industries: Companies involved in nuclear fusion and commercial aerospace, including Guoguang Electric and Aerospace Power [6][46]. 3. Funding and Valuation - Passive fund inflows into military ETFs have increased, with a net inflow of 640 million yuan during the week, indicating a positive trend in funding for the sector [27][31]. - The report notes that the military sector's valuation remains attractive, with most companies expected to have valuations below 30 times earnings by 2026, supporting a favorable long-term outlook [39][34].

Core Viewpoint - The military industry ETF (512660) has seen significant inflows, with over 1.2 billion yuan net inflow in the last 10 trading days and a year-to-date share growth of over 50%, currently reaching a scale of over 16.7 billion yuan, ranking first among its peers [1] Group 1 - The military industry ETF is expected to benefit from multiple catalysts including the "14th Five-Year Plan" push, the "Centenary of the Army" goal, domestic substitution, and rapid military trade development, leading to substantial growth in both domestic and foreign demand [1] - The ETF tracks the CSI Military Index, which comprehensively covers opportunities across various sectors including land, sea, air, and space, and has shown superior defensive and offensive characteristics compared to similar indices [1] - The CSI Military Index has demonstrated strong defensive performance, with the smallest decline during weak market conditions in 2018, 2022, and 2023, particularly notable in 2023 [1] Group 2 - In 2024, the CSI Military Index is expected to rank first in terms of returns among its peers, and it has shown significant gains during bull markets in 2019 and 2020, closely following military leaders and the CSI Defense Index [1]

Core Viewpoint - The military industry sector is experiencing significant growth, driven by various factors including government initiatives and geopolitical dynamics, with the military ETF leading the charge in performance and investment interest [1][3]. Group 1: ETF Performance - As of June 30, 2025, the military ETF has seen a net value increase of 37.97% over the past five years, ranking 172 out of 991 index stock funds, placing it in the top 17.36% [2]. - The military ETF has achieved a maximum single-month return of 29.40% since its inception, with the longest consecutive monthly gains being four months and a total increase of 40.40% during that period [2]. - The military ETF has recorded a significant inflow of funds, with a total of 2.25 billion yuan over the last ten trading days, indicating strong investor interest [1]. Group 2: Index Composition - The military index (399967) includes ten major military groups and representative companies in the military sector, reflecting the overall performance of the military industry [2]. - The top ten weighted stocks in the military index account for 35.55% of the total index, with key players including China Shipbuilding, AVIC Shenyang Aircraft, and China Aerospace Science and Technology [2]. Group 3: Market Drivers - The military industry is expected to benefit from multiple catalysts, including the "14th Five-Year Plan" initiatives, the centenary of the military, and the push for domestic production and replacement [3]. - Analysts suggest that the evolving global political landscape and increased defense spending will create new growth opportunities for the military sector, particularly for companies with export-related products or services [3].

Investment Rating - The report maintains an "Outperform" rating for the defense and military industry [5]. Core Viewpoints - The upcoming military parade on September 3 is expected to showcase the latest advancements in military capabilities, including traditional and new combat forces, reflecting China's strong ability to adapt to technological developments and evolving warfare [3][46]. - The defense and military index has shown strong performance, with a 6.90% increase from June 23 to June 27, outperforming the Shanghai and Shenzhen 300 index by 4.95 percentage points [3][12]. - The report highlights a strong demand recovery expected in the military industry by 2025, driven by multiple catalysts such as the "14th Five-Year Plan" and the "Centenary of the Army" goals, suggesting significant growth in both domestic and foreign demand [4][47]. Summary by Sections 1. Weekly Market Review - The military industry index (801740) increased by 6.90% during the week of June 23-27, while the Shanghai and Shenzhen 300 index rose by 1.95%, ranking second among 31 first-level industries [12][17]. - The military industry index has risen by 8.28% since 2025, while the Shanghai and Shenzhen 300 index has decreased by 0.33%, indicating a relative outperformance of 8.61 percentage points [19]. - The aviation sector showed the most significant gains, with notable increases in specific stocks such as Zhimin Da and Hangfa Technology, which rose by 19.62% and 18.91%, respectively [23]. 2. Investment Opportunities - The report recommends focusing on three main lines of investment: domestic trade, foreign trade, and self-sufficiency [47]. - For domestic trade, suggested companies include Tianqin Equipment, Bai'ao Intelligent, and Gaode Infrared [47]. - In the foreign trade sector, companies like Guangdong Hongda and Aerospace Rainbow are highlighted [48]. - For self-sufficiency, companies involved in commercial engines and nuclear fusion, such as Hangyu Technology and Guoguang Electric, are recommended [51]. 3. Funding and Valuation - The report notes a slight increase in passive fund sizes and leverage funds, indicating a positive outlook for the military sector's funding environment [30][36]. - As of June 27, the military industry index's price-to-earnings ratio (TTM) stands at 86.67 times, suggesting a high configuration value given the expected recovery in the industry by 2025 [47][37]. - The report emphasizes that most companies in the military sector are expected to have valuations below 30 times by 2026, indicating potential for performance improvement [41].

Group 1 - The Indonesian government is evaluating the feasibility of purchasing Chinese-made J-10 fighter jets, indicating a renewed demand for advanced Chinese military equipment amid ongoing conflicts [1] - The military trade sector is experiencing significant activity, with the military ETF (512660) seeing over 500 million yuan in net inflows for five consecutive days, and its fund size has grown over 40% this year, currently exceeding 14.3 billion yuan [1] - Analysts from Huafu Securities predict substantial growth in the defense and aerospace sectors driven by multiple catalysts, including the "14th Five-Year Plan" and the "Centenary of the Army" goals, with the military industry index's TTM price-to-earnings ratio at 65.05, indicating high investment value [1] Group 2 - The military ETF (512660) tracks the CSI Military Industry Index (399967), which includes the top ten military-related listed companies, reflecting the overall performance of the Chinese military theme stocks [2] - The CSI Military Industry Index (H30229) aims to provide authoritative investment targets for the military sector, showcasing distinct characteristics of the national defense industry [2]

Investment Rating - The industry rating is "Outperform the Market" [5][79]. Core Viewpoints - The report maintains a bullish outlook on the military industry, emphasizing strong demand recovery expected by 2025, driven by multiple catalysts including the "14th Five-Year Plan" and "Centenary Goals of the Army" [4][45]. - The military sector is expected to see significant growth in both domestic and foreign demand, with a strong recommendation for investment in three main lines: domestic trade, foreign trade, and self-sufficiency [4][46]. Summary by Sections 1. Market Review - The military index (801740) increased by 0.41% from June 3 to June 6, while the CSI 300 index rose by 0.88%, resulting in an underperformance of -0.47 percentage points [11][16]. - Since the beginning of 2025, the military index has risen by 2.31%, outperforming the CSI 300 index, which has decreased by 1.55%, leading to a relative outperformance of 3.85 percentage points [18]. 2. Key Investment Opportunities - Domestic Trade: - Land Equipment: Companies such as Tianqin Equipment, Bai'ao Intelligent, and Gaode Infrared are highlighted [4][46]. - Components & Aerospace: Companies like Huojue Electronics and Chengdu Huamei are recommended [4][46]. - Information Technology Upgrade: Companies such as Xinjinggang and Sichuan Aerospace are noted [4][46]. - Foreign Trade: Companies like Guangdong Hongda and Aerospace Rainbow are suggested [9][46]. - Self-Sufficiency: - Commercial Engines: Companies like Hangyu Technology and Tunan Co. are mentioned [10][46]. - Commercial Aircraft: Companies such as Xiling Power and Aerospace Huanyu are included [10][46]. - Nuclear Fusion: Companies like Guoguang Electric and Lianchuang Optoelectronics are noted [10][46]. 3. Funding and Valuation - Passive fund inflows into military ETFs increased, with a net inflow of 1.518 billion yuan during the week, indicating a positive trend in funding [29][35]. - As of June 6, the military sector's price-to-earnings ratio (TTM) stands at 65.49, with a percentile rank of 89.8%, suggesting high investment value at this time [4][46].

Group 1 - The A-share market saw a collective rise on May 12, with the Shanghai Composite Index up by 0.82%, the Shenzhen Component Index up by 1.72%, and the ChiNext Index up by 2.63% [1] - The total market turnover reached 1.34 trillion yuan, an increase of 118.5 billion yuan compared to the previous day, with over 4,100 stocks rising [1] - Key sectors that performed well included military industry, robotics, and the Apple supply chain [1] Group 2 - The military industry ETF (512660) closed with a significant increase of 4.68% [2] - The military trade outlook is positive, benefiting from multiple factors such as the "14th Five-Year Plan" completion, the "100th Anniversary of the Army" goal, domestic substitution, and rapid military trade development [4] - The military sector's gross and net profit margins have rebounded as of Q1 2025, with both domestic and international conditions supporting performance improvement for the year [4] - The current year marks the end of the "14th Five-Year Plan," with previously delayed defense construction tasks needing completion, and future demand is expected to be released in line with long-term goals such as the 100th anniversary of the army in 2027 and defense modernization by 2035 [4] - The military sector shows strong positive expectations for domestic demand growth, driven by multiple catalysts [4] - The military ETF (512660) tracks the CSI Military Index, selecting representative listed companies in aerospace, aviation, shipbuilding, weaponry, and military electronics to reflect the overall performance of the military industry in the A-share market [4] - The military sector has long-term investment value, but short-term trends are primarily event-driven, suggesting that interested investors should monitor the military ETF (512660) to seize investment opportunities [4]