Core Viewpoint - The rising geopolitical tensions in the Middle East are driving significant activity in the A-share military industry stocks, with notable price surges observed in companies like Longcheng Military Industry and Guangli Technology [1][6]. Company Summary - Longcheng Military Industry has achieved a three-day consecutive price increase, with the latest price at 18.36 yuan and a trading volume of 19.95 billion yuan, resulting in a market capitalization of 13.297 billion yuan [2]. - Over the past three trading days, Longcheng Military Industry's stock has increased by 33.14% [3]. - The stock has seen a net inflow of 21.96 million yuan from main funds, while retail investors contributed a net inflow of 40.32 million yuan [5]. - The company is involved in military equipment and has a significant focus on military products, including mortars and individual rockets [8]. Industry Summary - The military sector is experiencing heightened interest due to international geopolitical instability, particularly in the Middle East, which is expected to boost military trade [10][12]. - Global military spending is projected to increase for the tenth consecutive year in 2024, with the highest growth rates observed in Europe and the Middle East [12]. - The upcoming Paris Air Show in June 2025 is anticipated to be a significant event for the aerospace sector, potentially catalyzing investment interest in related industries [13][14]. - The military trade market is expected to expand from military aircraft and radar-related stocks to include missiles, ammunition, and the broader military supply chain [16].

Investment Rating - The industry investment rating is "Outperform the Market" [1] Core Viewpoints - The ongoing conflict in the Middle East, particularly the Israel-Iran tensions, is expected to boost military trade, leading to a potential expansion in the military trade market [4][12] - The report highlights significant stock price increases for domestic military trade-related companies following the India-Pakistan conflict, with some companies seeing price increases exceeding 50% [5][17] - The military industry is anticipated to experience a turning point in orders as the "Centenary of the Army Building Goals" enters its second half, with new technologies and products expected to drive market growth [18] Summary by Sections Industry Overview - The closing index for the defense industry is 1524.38, with a 52-week high of 1712.48 and a low of 1113.62 [1] Market Performance - The military sector indices showed a weekly increase, with the CSI Military Index rising by 0.55% and the Shenwan Military Index increasing by 1.03%, while the broader market indices declined [19] - The top-performing stocks in the military sector for the week included Guorui Technology (+15.94%) and Chenxi Aviation (+13.98%) [21] Investment Recommendations - Two main investment themes are suggested: 1. Aerospace and "gap-filling" new focuses, including companies like Feilihua and YF Electronics [18] 2. New technologies, products, and market opportunities with greater elasticity, including companies like Aerospace Intelligence and Guorui Technology [18] Valuation Levels - As of June 13, 2025, the CSI Military Index stands at 10786.39, with a PE-TTM valuation of 104.83 and a PB valuation of 3.33, indicating that 80.24% of the time since January 1, 2014, the PE-TTM valuation has been lower than the current level [23][26]