Investment Rating - The report maintains a "Positive" investment rating for the defense and military industry [4]. Core Insights - The report highlights the significant growth potential in the military trade equipment sector, particularly focusing on aircraft engines as high-value consumables, which are expected to see increased demand due to long-term maintenance and replacement needs [10][15]. - The potential for domestic aircraft, such as the C919, to penetrate Southeast Asian markets is emphasized, with countries like Malaysia and Pakistan showing interest in adopting these aircraft [38][41]. - The report discusses the strategic positioning of companies like Huayin Technology in stealth materials and the anticipated growth in the ceramic-based composite materials sector [84][86]. Summary by Sections Military Trade Equipment - Aircraft engines hold a primary position in military trade, with their export share decreasing from 3.6% (2014-2018) to 2.0% (2019-2023) [14]. - The demand for maintenance and replacement of aircraft engines is driven by the long service life of military aircraft, which often exceeds the lifespan of the engines themselves [15][18]. C919 Aircraft - The C919 is expected to gain traction in Southeast Asia, with significant interest from Malaysian and Pakistani airlines [41][47]. - The global demand for commercial aircraft remains robust, with Airbus and Boeing having backlogs that exceed their annual delivery rates, indicating a favorable market for the C919 [47][55]. - The C919's production capacity is projected to increase significantly, with plans to reach 200 aircraft per year by 2029 [54][76]. Stealth Materials - Stealth technology is becoming a standard feature in advanced military aircraft, significantly enhancing their operational capabilities [86]. - The report identifies Huayin Technology as a key player in the stealth materials market, focusing on the development of ceramic-based composites [84][86]. Maintenance and Aftermarket - The military aircraft engine aftermarket is projected to exceed 428.7 billion yuan over the next 20 years, with an average annual market value of 21.44 billion yuan [25][28]. - Companies involved in the maintenance and aftermarket services for aircraft engines are expected to see substantial revenue growth as the market expands [28][31]. Supply Chain and Domestic Production - The report outlines the potential for increased domestic production and supply chain development for the C919, with a focus on enhancing the localization rate of components [77][80]. - The growth of domestic suppliers is anticipated to benefit from the increasing demand for locally produced aircraft and components [80][82].

Investment Rating - The report maintains a "Buy" rating for key companies in the aerospace and defense sector, including 航发动力, 图南股份, 华秦科技, 航亚科技, 航材股份, and 应流股份 [10]. Core Insights - The aerospace engine market is expected to experience significant growth during the "14th Five-Year Plan" period, leading to a substantial aftermarket potential exceeding 400 billion yuan over the next 20 years, driven by the high-value consumable nature of military engines [2][6][7]. - The maintenance market for military aerospace engines is projected to account for over 50% of the total lifecycle cost, indicating a strong demand for repair and maintenance services [6][25]. - The report highlights that the aftermarket for aerospace engines is approximately four times larger than the new engine market, with a significant portion of costs attributed to materials and maintenance [7][60]. Summary by Sections Market Overview - The military aerospace engine's consumable nature necessitates multiple repairs throughout its lifecycle, with the lifespan of military aircraft often exceeding that of their engines [17][19]. - The report emphasizes the increasing frequency of engine replacements due to operational demands and technological advancements [21]. Aftermarket Potential - The future aftermarket space for military aerospace engines is estimated at approximately 428.74 billion yuan over the next 20 years, with an average annual market value of 21.44 billion yuan [7][57]. - The breakdown of the aftermarket includes approximately 5% for spare engines, 22% for engine repairs, and 51% for spare parts [60]. Industry Dynamics - The report indicates that the demand for maintenance and repair services will enhance the revenue and profitability of engine manufacturers, particularly as domestic production rates increase [8][14]. - The control systems segment of aerospace engines is expected to benefit significantly from the expansion of the maintenance and replacement market [8][16]. Company Performance - The report notes that key companies like 航发动力 have shown robust revenue growth in their aerospace engine and derivative product segments, with projected growth rates of 19% to 22% during the "14th Five-Year Plan" period [39][40].