Investment Rating - The report provides a "Buy" rating for the defense and military industry, indicating a strong potential for growth and performance exceeding the market index by over 20% in the next 6 to 12 months [86]. Core Insights - The report emphasizes the significant advancements in military technology showcased during the recent military parade, highlighting the strategic importance of new equipment in enhancing national defense capabilities [1][2]. - It identifies a trend towards modernization and diversification of military assets, particularly in missile systems, unmanned vehicles, and naval capabilities, which are expected to drive future demand [4][50][67]. Summary by Sections 1. Missile Systems: "East Wind Rising, Long Sword Soaring" - The report highlights the introduction of advanced long-range artillery and missile systems, such as the 191 long-range box rocket launcher, which enhances the army's strike capabilities with high precision and rapid response [9]. - The CJ-20A cruise missile and other variants are noted for their role in multi-domain deterrence and precision strikes, indicating a robust demand driven by regional security challenges [14]. - Hypersonic missiles like the DF-17 and DF-26D are recognized for their speed and evasion capabilities, marking a shift towards non-linear warfare strategies [15][27]. 2. Unmanned Systems: "Unmanned Iron Array, Offense and Defense Integrated" - The report discusses the deployment of various unmanned aerial vehicles (UAVs) designed for reconnaissance and combat, showcasing China's advancements in autonomous warfare technology [51]. - It notes the increasing integration of unmanned ground vehicles for diverse military tasks, indicating a shift towards automated and efficient combat operations [57]. - The naval segment highlights the introduction of unmanned underwater vehicles and surface drones, emphasizing their strategic role in modern naval warfare [62]. 3. Aviation, Ground, and Amphibious Forces: "Dragon Soaring in the Sky, Iron Flow Treading the Land" - The report details the advancements in fighter jets, particularly the J-35A, which signifies a transition in naval defense capabilities from coastal to blue-water operations [68]. - Ground forces are equipped with next-generation armored vehicles, enhancing their operational effectiveness and adaptability in various combat scenarios [75]. - The amphibious assault capabilities are strengthened with new vehicles designed for rapid deployment and versatile operational roles, reflecting a comprehensive upgrade in military readiness [79].

Core Viewpoint - The strategic strike group showcased a powerful military presence through various missile formations, emphasizing the capability to safeguard national security and maintain world peace [1]. Group 1: Cruise Missile Formation - The cruise missile formation, featuring the Changjian-1000, represents a joint effort from the navy, air force, and rocket force, highlighting the evolution of China's cruise missile technology from subsonic to hypersonic [2][4]. - The Changjian-1000 is noted as China's first hypersonic cruise missile, capable of precise strikes on land, sea, and air targets, showcasing its flexibility and immediate launch capabilities [4]. - The formation includes advanced missiles like Changjian-20A and Yingji-18C, which are designed for long-range precision strikes and comprehensive deterrence [6]. Group 2: Hypersonic Missile Formation - The hypersonic missile formation features missiles such as Yingji-21, Dongfeng-17, and Dongfeng-26D, demonstrating China's advanced hypersonic strike capabilities [6][8]. - The Dongfeng-17 missile is characterized by its unique warhead shape, enhancing its penetration capabilities, while the Dongfeng-26D has improved adaptability to complex battlefield environments [8]. Group 3: Nuclear Missile Formations - The first nuclear missile formation includes key strategic assets like the "Jinglei-1" air-launched missile and "Julang-3" submarine-launched intercontinental missile, underscoring their role as strategic "trump cards" for national sovereignty [9][14]. - The first nuclear missile formation showcases a "triad" of strategic nuclear forces, reinforcing national security and military confidence [14][16]. - The second nuclear missile formation features the Dongfeng-5C liquid intercontinental strategic nuclear missile, which has a global strike range, representing a significant deterrent capability [17][19].

Group 1: Capital Market News - The LPR for August remains unchanged at 3.00% for 1-year and 3.50% for over 5 years[13] - The Shanghai Composite Index rose by 1.04% to close at 3766.21 points, marking a ten-year high[14] - The total trading volume in the Shanghai and Shenzhen markets reached 240.82 billion, a decrease of 180.1 billion from the previous day[14] Group 2: Market Performance - The Kexin 50 Index increased by 3.23%, while the ChiNext Index rose by 0.23%[17] - As of August 20, 2025, there are 271 constituent stocks in the North Exchange, with an average market capitalization of 3.42 billion[17] - The North Exchange's trading volume was 40.687 billion, down by 12.207 billion from the previous trading day[17] Group 3: Company Announcements - Kang Le Seed Industry reported a revenue of 0.46 billion, down 2.68% year-on-year, with a profit of 0.09 billion, down 8.55%[32] - Wei Chang Polymer reported a revenue of 8.79 billion, up 26.83% year-on-year, with a profit of 0.88 billion, up 32.67%[33] - Youji Co., Ltd. reported a revenue of 4.43 billion, up 18.66% year-on-year, with a profit of 0.44 billion, up 55.16%[38]

Core Viewpoint - The A-share market experienced a strong rebound, with the Shanghai Composite Index reaching a ten-year high, driven by significant trading volume and positive sentiment in the defense and military sector due to an upcoming military parade [1][4]. Group 1: Market Performance - The A-share market recorded a total trading volume of 2.45 trillion yuan, maintaining above 2 trillion yuan for six consecutive trading days [1]. - The defense and military sector saw increased activity, particularly the high-profile defense military ETF (512810), which rose by 0.55% during the day [1][3]. Group 2: Defense and Military Sector Insights - The military parade is expected to showcase new types of combat capabilities, including unmanned systems and advanced weaponry, which could redefine global military technology competition and create structural growth opportunities for the defense industry [3][5]. - The defense military ETF (512810) has maintained high trading activity, with an average daily transaction exceeding 100 million yuan and a net subscription of over 860 million yuan in the past five days [4]. Group 3: Future Outlook - The upcoming military parade is anticipated to drive short-term momentum in the defense sector, while the long-term investment logic remains robust, supported by strategic goals for building a world-class military [7]. - The defense military ETF (512810) encompasses a range of sectors, including commercial aerospace and military AI, positioning it as an efficient tool for investing in core defense assets [7].

Core Viewpoint - The military industry sector in A-shares is experiencing a rebound after recent adjustments, driven by strong capital inflows and upcoming military parades showcasing advanced weaponry and new combat capabilities [1] Group 1: Market Performance - A-shares opened lower but showed upward movement, with the military industry sector rebounding [1] - The Aerospace ETF (159227) saw a slight decline of 0.25%, while stocks like Zhenxing Technology rose over 5% [1] - The Aerospace ETF has attracted over 0.9 billion yuan in net inflows recently, totaling over 5.58 billion yuan since July, reaching a new high of 9.19 billion yuan [1] Group 2: Industry Trends - Compared to previous military parades in 2015 and 2019, this year's event emphasizes new combat directions such as unmanned systems, underwater operations, cyber warfare, and hypersonic capabilities [1] - Military enterprises are experiencing a full order book and are accelerating production and delivery, indicating sustained high industry prosperity in the second half of the year [1] Group 3: ETF Characteristics - The Aerospace ETF (159227) closely tracks the Guozheng Aerospace Index, which has over 97.86% weight in the military industry [1] - The core sectors of aviation and aerospace equipment account for 66.8% of the index's weight, focusing on key areas of the aerospace equipment industry chain [1]

Core Viewpoint - The military industry sector has shown significant strength, with various companies experiencing substantial stock price increases, driven by upcoming military parades and related events [1] Summary by Category Market Performance - As of the report, Zhenlei Technology has risen over 17%, Hailanxin over 10%, and several companies like Zhongdian Xilong and Fenghuo Electronics have hit the daily limit for two consecutive days [1] - Aerospace Technology has achieved five daily limit increases in the past seven days, while Dayuan Pump Industry has seen three consecutive daily limit increases, and Changcheng Military Industry has reached new highs [1] Industry Trends - The military industry is expected to experience significant marginal changes in fundamentals as it approaches 2025, with a notable increase in market attention due to frequent military trade achievements [1] - Historically, military sectors tend to be active around military parades, and the current period leading up to the August parade is crucial for investors [1] Subsector Analysis - According to Minsheng Securities, various subsectors within the military industry will be catalyzed to different extents by the upcoming military parade, with ground equipment showing particularly strong performance this year [1] - From June onwards, ground equipment has outperformed other sectors, with an impressive cumulative increase of 81% as of August 5, driven by military trade and parade-related catalysts [1] Future Development - The upcoming military parade will showcase a new generation of traditional weaponry alongside new combat forces, including unmanned systems, underwater operations, cyber warfare, and hypersonic capabilities [1] - The emphasis on "new generation traditional weaponry" and "new combat forces" indicates a comprehensive development trend for military equipment in the future [1]

Market Overview - On August 6, A-shares saw all three major indices rise, with the Shanghai Composite Index increasing by 0.45%, the Shenzhen Component Index by 0.64%, and the ChiNext Index by 0.66%. The STAR 100 Index led with a rise of 1.62% [1][2] - In the Hong Kong market, major indices also collectively rose, with the Hang Seng Tech Index up by 0.20% [4][5] Sector Performance - The defense and military sector led the gains with an increase of 3.07%, followed by machinery equipment at 1.98% and coal at 1.89%. Conversely, the pharmaceutical and biological sector saw a decline of 0.65%, along with commercial trade and construction materials, both down by 0.23% [6] Hot Topics - The defense sector is heating up as the 80th anniversary of the victory in the Anti-Japanese War approaches, with the National Defense ETF (512670) rising by 2.4% to a new high of 0.855. The upcoming military parade on September 3, 2025, is expected to draw significant attention, particularly towards new technologies in military equipment [7] - Analysts highlight three advantages for the securities sector: 1. High cost-performance ratio due to improved mid-year performance and potential for rotation and rebound [8] 2. Multiple catalysts from relaxed financial regulations and potential for increased trading sentiment from stablecoins [8] 3. Long-term value in brokerage firms, particularly top-tier firms, due to enhanced business leverage and low public fund allocation [8]

Summary of Military Industry Conference Call Industry Overview - The military industry is experiencing significant investment opportunities due to global geopolitical tensions and an arms race, particularly highlighted by China's military equipment performance in the India-Pakistan air conflict, which has increased international recognition of Chinese military products [1][2]. Key Points and Arguments - **Investment Opportunities**: The military sector is expected to benefit from increased order delivery tolerance from institutions, driven by geopolitical tensions and high-end equipment exports [1][2]. - **Market Events**: The upcoming 93rd anniversary military parade is anticipated to boost market activity, alongside the conclusion of the 14th Five-Year Plan and the initiation of the 15th plan, which may lead to expedited orders [3][5]. - **Performance Metrics**: In the first half of 2025, the defense industry index outperformed the broader market, driven by a reversal in industry sentiment and concentrated order issuance [1][10]. - **Valuation Trends**: The military industry's valuation has risen to the 75th percentile, indicating potential for further growth, shifting from EPS-driven to PE-driven factors due to increased global asset allocation demand [8][21]. - **Contract Liabilities**: A 12.7% increase in contract liabilities in Q1 2025 suggests a pre-order phenomenon, indicating future performance improvements [11][9]. Important but Overlooked Content - **Geopolitical Context**: The ongoing geopolitical tensions, including conflicts in Ukraine and the Middle East, are expected to sustain demand for military equipment, with countries like South Korea and Japan increasing their defense budgets [19][16]. - **Technological Advancements**: The military sector is focusing on new combat capabilities, including unmanned systems and high-speed weapons, which are crucial for future military strategies [7][29]. - **Investment Recommendations**: Key investment areas include military trade exports, military electronics, and ammunition, with specific companies highlighted for their potential [5][30][31]. Future Outlook - The military industry is poised for continued growth, driven by strategic security asset allocation and the global expansion of Chinese military assets, particularly in the arms trade [21][22]. - The upcoming 15th Five-Year Plan is expected to clarify future directions for the military sector, enhancing market confidence and potentially leading to increased order flows [15][13]. This summary encapsulates the critical insights from the military industry conference call, highlighting the current landscape, investment opportunities, and future trends.

Core Viewpoint - The 80th anniversary of the victory in the Chinese People's Anti-Japanese War and the World Anti-Fascist War will be marked by a grand military parade, showcasing China's military technology and strategic deterrence capabilities, indicating a sustained high demand in the military industry [1][2]. Group 1: Military Parade Highlights - The military parade will feature a combination of foot formations, equipment formations, and aerial teams, demonstrating the restructured military capabilities and the integration of various armed forces [1]. - The parade will include new-generation traditional weaponry alongside advanced combat forces such as unmanned systems, underwater operations, cyber warfare, and hypersonic technologies, all of which are domestically produced [2]. - Key characteristics of the displayed weaponry include systematic selection from various military branches, comprehensive coverage of military capabilities, and a focus on practical combat scenarios [2]. Group 2: Industry Outlook - The military industry is expected to maintain a high level of demand due to increasing tensions in the Asia-Pacific region and the necessity for enhanced national defense investments [3]. - The goal of achieving a modernized weaponry system by 2027 will drive the acceleration of reforms and innovations within the military sector, particularly in phasing out outdated equipment [3]. - Future military spending is likely to focus more on aerospace and aviation sectors, given the existing gaps in capabilities compared to the U.S. [3].

Market Overview - The three major indices in the A-share market rose over 1%, with the Shanghai Composite Index surpassing 3400 points and the ChiNext Index increasing by over 2% [1][3] - The trading volume in the A-share market exceeded 1.4 trillion yuan, indicating a significant increase in market activity [1][3] Geopolitical Impact - The announcement of a ceasefire between Iran and Israel has reduced expectations for further escalation of conflict, leading to an increase in global risk appetite [1][3] - The upcoming 80th anniversary military parade in China on September 3 is expected to showcase domestically produced military equipment, highlighting advancements in national defense and technology autonomy [2][3] Economic Indicators - China's economic growth remains stable, with strong consumer growth despite a slowdown in investment and industrial production [1][2] - The market is expected to experience fluctuations, with a preference for technology and dividend stocks in investment strategies [1][3] Market Performance - On June 24, the A-share market saw significant gains, with the Shanghai Composite Index closing at 3420.57 points, up 1.15%, and the ChiNext Index closing at 2064.13 points, up 2.30% [4] - Among the sectors, power equipment, non-bank financials, and retail saw the highest gains, while oil and coal sectors experienced declines [4] Fund Flow - The market turnover reached 14,483.99 billion yuan, showing an increase from the previous trading day [5] - The margin trading balance reported at 18,169.01 billion yuan, also reflecting an upward trend [5]