Core Viewpoint - The recent production and deployment of Russia's new hypersonic missile "Zircon" signifies a strategic shift in military capabilities, posing a potential threat to NATO and altering the balance of power in Europe [1][2][3] Group 1: Missile Production and Capabilities - The first batch of the "Zircon" missile has been completed and delivered to the military, with production initiated following successful test launches [1][2] - The missile has a range of 1,000 to 5,500 kilometers and can carry conventional or nuclear warheads, making it a versatile weapon in Russia's arsenal [7][8] - The missile's speed can reach up to 10 Mach, making it extremely difficult for current defense systems to intercept [9][10] Group 2: Strategic Implications - The deployment of the "Zircon" missile is a direct response to NATO's military activities and the U.S. missile systems being positioned in Europe and the Asia-Pacific region [3][8] - Russia's decision to lift self-imposed restrictions on missile deployment under the Intermediate-Range Nuclear Forces Treaty indicates a more aggressive military posture [2][3] - The missile's capabilities could significantly reduce the necessity for nuclear weapons, as its destructive power is comparable to that of nuclear arms [7][12] Group 3: NATO's Response and Concerns - NATO countries, particularly Germany, are reportedly unprepared to counter the "Zircon" missile, with any successful interception being considered a "lucky accident" [9][10] - There are ongoing discussions among Ukraine and its allies regarding the potential acquisition of advanced missile defense systems to counter the threat posed by the "Zircon" missile [10][11] - Experts have raised concerns about the effectiveness of current missile defense systems against hypersonic threats, indicating a significant gap in capabilities that may take years to address [11][12]

Investment Rating - The report maintains a "Positive" investment rating for the defense and military industry [3]. Core Insights - The report emphasizes the innovation in new combat forces and the importance of system integration in the defense sector, highlighting the growth potential in various sub-sectors such as aerospace electronics, unmanned systems, underwater defense, and data link technologies [8][10][37]. Summary by Sections Aerospace Electronics - The company, Aerospace Electric, is backed by the Aerospace Jiangnan Group and focuses on high-tech products in the aerospace and defense electronics sector. It has become a significant player in the industry, with over 70% of its products sold to high-end clients in aerospace and military sectors [12][21]. - The company has established a cross-regional, group-based structure to enhance its R&D, production, and sales capabilities, ensuring high-quality development [16][21]. Unmanned Systems - Unmanned systems have transitioned from the periphery to the center of modern warfare, with drones playing a crucial role in military operations. The report outlines the evolution of drones and their increasing complexity and autonomy [40][41]. - The modern drone ecosystem includes various types, from consumer drones to advanced stealth combat drones, reflecting significant technological advancements [42][43]. Underwater Defense - Unmanned Underwater Vehicles (UUVs) are highlighted as a new class of equipment with diverse applications and high autonomy. The report notes that the U.S. military's UUV market could exceed $50 billion over the next decade [74][81]. - UUVs are characterized by their stealth, cost-effectiveness, and support for distributed operations, making them a vital component of modern naval strategies [81][86]. Data Link Technologies - The report discusses the importance of data link technologies in enhancing operational connectivity and efficiency in military operations, emphasizing the need for continuous technological upgrades [8][37]. Market Potential - The report estimates that the Chinese military drone market could exceed 40 billion yuan by 2028, driven by increasing demand for various types of drones, including medium and large military drones [64][66].

Core Viewpoint - Iran plans to deploy hypersonic missiles in future attacks to penetrate Israel's air defense systems [1] Group 1 - Iran's intention to enhance its military capabilities by incorporating advanced hypersonic technology [1] - The strategic implications of Iran's military advancements on regional security dynamics, particularly concerning Israel [1]