Investment Rating - The report does not explicitly state an investment rating for the ceramic matrix composites (CMC) industry. Core Insights - Ceramic matrix composites (CMC) are advanced inorganic non-metallic materials characterized by high strength, high hardness, high elastic modulus, and thermal-chemical stability, making them suitable for various applications, particularly in aerospace [2][3][16]. Summary by Sections Industry Overview - CMCs consist of a ceramic matrix reinforced with fibers, which enhances their mechanical properties and thermal stability. They are considered one of the most important materials in the inorganic non-metallic category after metals [2][4]. Material Properties - CMCs exhibit superior properties such as: - High strength, significantly surpassing that of typical metals and plastics - High hardness, providing excellent wear resistance - High-temperature resistance, with operational temperatures ranging from 1,150 to 2,000°C, which is a notable improvement over high-temperature alloys [3][4][16]. - Lightweight characteristics, allowing for a weight reduction of 30% to 50% compared to high-temperature alloys [3][16]. - Oxidation resistance, enhancing reliability and reducing costs in high-temperature applications [3]. Industry Chain - The CMC industry chain consists of three main segments: - **Upstream**: Focuses on raw materials for CMC production, including fibers and matrix materials like silicon carbide and aluminum oxide. Approximately 53% of global patents are related to these upstream materials [8][9]. - **Midstream**: Involves production processes such as polymer infiltration pyrolysis (PIP), chemical vapor infiltration (CVI), and reaction melt infiltration (RMI). Midstream patents account for about 38% of total patents in the CMC field [9][10]. - **Downstream**: CMCs are increasingly applied in turbine engines, braking systems, and combustion furnaces, with significant growth in these application areas [10][11]. Application Areas - CMCs are utilized in various sectors, including: - Aerospace: Ideal for high-temperature structural components in engines, with applications in turbine blades and combustion chambers [16][22]. - Energy: Suitable for components in nuclear fusion reactors and oil and gas industries due to their high-temperature and corrosion resistance [16]. - Transportation: Emerging as a new generation of brake materials for advanced vehicles, with a projected increase in lightweight material usage from 30% to 70% by 2030 [17][18]. Commercialization Progress - The commercialization of CMCs in aerospace is advancing, with a trend from low-temperature to high-temperature applications, and from static to rotating components. The global market for CMCs is expected to reach $7.51 billion by 2026 [26][29].

Core Viewpoint - Ceramic matrix composites (CMCs) exhibit excellent high-temperature performance and have broad applications in aerospace, nuclear power, and automotive industries, with significant market potential. China leads in brake and thermal protection for aircraft but lags in aerospace engine applications [2]. Group 1: CMC Characteristics and Applications - CMCs are defined as composites formed by introducing reinforcement materials into a ceramic matrix, resulting in superior properties such as high-temperature resistance, low density, high specific strength, and oxidation resistance [3][17]. - SiCf/SiC composites are highlighted as ideal materials for the hot sections of aerospace engines, already in mass production for static components, with ongoing exploration for rotating parts [4][29]. - In the nuclear sector, SiCf/SiC composites are considered ideal candidates for reactor core components due to their high melting point, thermal conductivity, and neutron irradiation stability [41]. - Cf/SiC composites are widely used in aerospace for thermal protection and satellite mirrors, effectively addressing the thermal protection and weight reduction needs of hypersonic vehicles [45][46]. - CMCs are emerging as the preferred choice for high-performance brake materials, already in mass production for automotive and aviation applications [52][53]. Group 2: Market Growth and Trends - The global CMC market was valued at $11.9 billion in 2022 and is projected to grow at a CAGR of 10.5%, reaching $21.6 billion by 2028, with the highest market share in defense and aerospace sectors [5]. - The demand for CMCs in China's aerospace engine industry is expected to reach a turning point by 2024, driven by technological advancements and cost reductions [12][11]. Group 3: CMC Production and Industry Landscape - The production of CMC components involves complex processes with high barriers to entry, including fiber preparation, preform weaving, interface layer preparation, matrix densification, and machining [6][7]. - GE has established a vertically integrated CMC supply chain, producing significant quantities of CMC materials and components, with a tenfold increase in production expected over the next decade [8][37]. - China's CMC industry has developed a relatively complete supply chain, with advancements in silicon carbide fiber production and CMC applications, although challenges remain in scaling up production and improving product stability [10][11].

Core Viewpoint - Ceramic matrix composites (CMCs) exhibit excellent high-temperature performance and have broad applications in aerospace, nuclear power, and automotive industries, with significant market potential. China leads in brake and thermal protection for aircraft but lags in aerospace engine applications. The demand for CMCs in China's aerospace industry may reach a turning point in 2024, driven by advancements in production technology and cost reductions [2][12]. Group 1: CMC Characteristics and Applications - CMCs are defined as composites that incorporate reinforcing materials into a ceramic matrix, resulting in superior properties such as high-temperature resistance, low density, and high strength [3][19]. - SiCf/SiC composites are a research focus due to their excellent oxidation resistance and longevity, making them ideal for aerospace engine applications [4][26]. - CMCs are increasingly recognized as strategic materials for next-generation aerospace engines, capable of withstanding temperatures significantly higher than traditional nickel-based superalloys [29][33]. Group 2: Market Growth and Demand - The global CMC market was valued at $11.9 billion in 2022 and is projected to grow at a CAGR of 10.5%, reaching $21.6 billion by 2028, with the highest market share in defense and aerospace sectors [5]. - The demand for CMCs in the aerospace sector is expected to surge, particularly for components like combustion chambers and turbine blades, as countries strive for higher engine efficiency and reduced emissions [32][40]. Group 3: CMC Production and Industry Landscape - The production of CMCs involves complex processes with high barriers to entry, including fiber preparation, preform weaving, interface layer preparation, and matrix densification [6][7]. - General Electric (GE) has established a vertically integrated CMC supply chain, significantly increasing production capacity and demonstrating successful applications in various engine components [6][40][41]. - China's CMC industry has developed a relatively complete supply chain, with advancements in silicon carbide fiber production and CMC applications, particularly in brake materials for aircraft [8][10][11]. Group 4: Future Investment Opportunities - The anticipated turning point in demand for CMCs in China's aerospace industry presents substantial growth potential for related companies, especially as production technologies improve and costs decrease [12][8]. - As the application of SiCf/SiC composites matures, upstream raw material demand will increase, leading to potential rapid growth for midstream CMC component manufacturers [12][10].

Investment Rating - The report suggests a positive outlook for the military industry, indicating a potential recovery in performance by 2025, with a focus on companies with order recovery expectations and performance support [2][10][44]. Core Insights - The military sector reported a total revenue of 764.903 billion yuan in 2024, a year-on-year increase of 1.16%. Key segments showing positive growth include shipbuilding, aerospace engines, and aviation [2][10]. - The net profit for the military sector decreased to 26.655 billion yuan in 2024, down 38.01% year-on-year, primarily due to lower downstream demand and price reductions for certain products [12][10]. - The first quarter of 2025 is expected to show signs of recovery, particularly in ground equipment and aerospace segments, with a projected increase in associated transaction amounts [2][29]. Summary by Sections 1. Industry Overview - The military sector's revenue growth was driven by shipbuilding (10.87% increase), aerospace engines (4.46% increase), and aviation (2.75% increase), while ground equipment and commercial aerospace saw significant declines [10][12]. - The report highlights a structural recovery in the military sector, with positive signals emerging from major companies regarding contract announcements and performance stabilization [2][38]. 2. Investment Strategy - The report recommends focusing on three main investment lines: 1. Traditional military sectors with expected order recovery, particularly in aerospace engines, shipbuilding, and aviation [2][44]. 2. New domains characterized by low-cost, intelligent, and systematic features, including precision-guided munitions and unmanned systems [2][44]. 3. Companies with asset integration expectations and competitive positions in military trade markets [2][44]. 3. Recommended Stocks - Traditional military direction: Recommended stocks include Aerospace Power, Aerospace Control, and Huayin Technology [3][45]. - New domain and new quality direction: Recommended stocks include High De Infrared, North Navigation, and Aerospace Rainbow [3][45]. - Reform and overseas direction: Recommended stocks include Guorui Technology and Construction Industry [3][45].