Core Viewpoint - The aerospace industry is expected to maintain its prosperity through 2026, driven by the resonance of domestic and international demand, with new domains and qualities likely to release elasticity, benefiting from the development of commercial aerospace and special technology spillover [1][2]. Group 1: Domestic and International Demand - The "14th Five-Year Plan" and special trade demand are expected to create a resonance that sustains industry prosperity [1]. - In 2024, global defense spending is projected to increase by 9.4% to $2.72 trillion, driven by complex geopolitical situations, which will enhance the demand for special equipment [1]. - China's share in the global special equipment market is anticipated to steadily increase, contributing to industry growth and profitability [1]. Group 2: New Domains and Qualities - The end of the "14th Five-Year Plan" will see the emergence of new types of equipment, with the "15th Five-Year Plan" emphasizing the integration of mechanization, information technology, and intelligence [2]. - New domain and quality equipment are expected to become key areas of focus in equipment construction, with significant demand anticipated to be released [2]. Group 3: Technological Spillover and Emerging Fields - The production and delivery capabilities of domestic large aircraft are expected to continue improving by 2026, driving upgrades in the aviation industry chain [3]. - The satellite internet space segment is entering a phase of normalized networking, with the industrialization process in the application phase expected to accelerate by 2026 [3]. - The low-altitude economy is gradually moving into the implementation stage, with high-quality development expected to continue through 2026 [3]. Group 4: Profit Forecast and Valuation - The valuation center for the sector is expected to rise, leading to a 23.8% increase in the target price for China Satellite to 52.2 yuan, indicating a potential upside of 6.6% [4]. - The company recommends focusing on new domains and qualities, core special trade targets, and new productivity benefiting from special technology spillover [4]. - Recommended stocks include Chujiang New Materials (002171.SZ), Aerospace Electronics (600879.SH), Feilihua (300395.SZ), AVIC Shenyang Aircraft (660760.SH), Guorui Technology (600562.SH), China Satellite (600118.SH), Zhenlei Technology (688270.SH), and Fudan Microelectronics (688385.SH) [4].

Core Viewpoint - The aerospace technology industry is expected to maintain high prosperity due to the resonance of domestic and international demand, driven by the "14th Five-Year Plan" and military trade needs, with significant growth anticipated in 2026 [1][5][6]. Group 1: Domestic Demand and Industry Growth - The modernization of special equipment and new application models are driving the continuous advancement of special equipment deployment and replacement [1]. - The domestic demand for the aerospace industry is projected to remain prosperous, supported by the iteration of aviation equipment and the release of guided equipment demand [1][5]. - The aerospace technology sector's net profit reached 7.579 billion yuan in Q2 2025, reflecting a 64% quarter-on-quarter increase, indicating a recovery in demand [5]. Group 2: Global Defense Spending and Market Opportunities - Global defense spending is expected to grow by 9.4% year-on-year to approximately $2.72 trillion in 2024, marking the largest increase since the Cold War [1][6]. - China's share of the global special equipment market is anticipated to steadily increase, enhancing industry growth potential and profitability [6]. Group 3: Emerging Equipment Demand - The demand for hypersonic, unmanned, and intelligent equipment is expected to be released in 2026, with significant growth potential in the supply chain's core segments [2][10]. - The penetration rate of hypersonic equipment is projected to increase rapidly, driven by the domestic demand for traditional and new models [9][10]. - Unmanned systems are becoming increasingly integrated into modern defense frameworks, with high growth potential anticipated in 2026 [10]. Group 4: Technological Spillover and New Industry Development - The spillover of special technologies is driving the growth of emerging industries such as large aircraft, low-altitude economy, and commercial aerospace [3][16]. - By September 2025, China Commercial Aircraft Corporation is expected to have delivered 22 C919 passenger aircraft, with production and delivery capabilities continuing to improve [3][16]. - The commercial aerospace sector is entering a phase of accelerated industrialization, with satellite internet construction becoming normalized [3][17]. Group 5: Investment Recommendations - Focus on core equipment, new domain and quality equipment, and the spillover of special technologies as key investment directions [18]. - The resonance of domestic and international demand is expected to sustain the prosperity of core equipment in 2026 [18]. - The emergence of new domain and quality equipment is anticipated to fulfill its growth potential in 2026 [18].