Group 1 - The asset evaluation report is prepared by Beijing Tianjian Xingye Asset Appraisal Co., Ltd. for Beijing Aerospace Feiteng Equipment Technology Co., Ltd. as part of a financing project [1][4] - The evaluation is based on the fundamental principles and professional standards set by the Ministry of Finance and the China Asset Appraisal Association [1][2] - The report includes an assessment of the total equity value of the shareholders of Beijing Aerospace Feiteng Equipment Technology Co., Ltd. as of February 28, 2025 [4][5] Group 2 - The report specifies that the evaluation results are valid for one year, from February 28, 2025, to February 27, 2026 [3] - The evaluation includes a detailed list of assets and liabilities, as well as future forecasts provided by the client and the evaluated entity [2][10] - The evaluated company, Beijing Aerospace Feiteng, focuses on the research and development of precision-guided weapon systems and has established a comprehensive R&D system for guided bombs [7][9] Group 3 - The company has a registered capital of approximately 45,254.40 million RMB and operates under the auspices of the China Aerospace Science and Technology Corporation [4][6] - The company has developed a series of precision-guided weapons that have been exported to multiple countries, generating military trade contracts worth nearly 2 billion RMB since 2013 [9] - The asset evaluation includes both tangible assets such as inventory and machinery, and intangible assets like patents and non-patented technologies [10][11]

Group 1: US-Russia Relations - The phone call between Russian President Putin and US President Trump lasted about one hour, discussing bilateral relations, the Ukraine issue, and the Middle East situation [1][3] - The conversation was described as pragmatic and specific, with both leaders on the same wavelength [3] - No discussions were held regarding the US halting arms supplies to Ukraine, nor were specific dates for the next round of negotiations mentioned [1][3] Group 2: Ukraine's Legislative Actions - Ukrainian President Zelensky signed a revised budget code allowing mining revenues to be transferred to the Ukraine-US Reconstruction Investment Fund [4][5] - The fund is structured with equal ownership between Ukraine and the US, aimed at accelerating Ukraine's economic recovery [5] - The development of the Dobro lithium mine is expected to be a key project in collaboration with the US [4][5] Group 3: Military Aid and Strategic Developments - Reports indicate that Trump and Zelensky are expected to discuss the suspension of military aid to Ukraine in an upcoming phone call [2][6] - The Pentagon has paused the shipment of certain military supplies to Ukraine, which has surprised some US lawmakers and officials [6][7] - Ukraine's Ministry of Defense has not received official notification regarding the suspension of military aid and is in communication with the US to clarify defense supply details [7]

Core Viewpoint - The U.S. Department of Defense has suspended the shipment of certain promised military aid to Ukraine due to concerns over low U.S. weapon stockpiles [1] Summary by Relevant Categories Military Aid - The U.S. has halted the delivery of some air defense missiles and precision-guided munitions to Ukraine [1] - The decision to pause military assistance was initially made in early June but only took effect recently [1] Weapon Stockpiles - There is a reported decrease in the total amount of artillery shells, air defense missiles, and precision-guided weapons available in the U.S. inventory [1]

Core Viewpoint - The U.S. Department of Defense has paused the shipment of certain air defense missiles and other precision-guided munitions to Ukraine due to concerns over low U.S. weapon stockpiles [1] Group 1 - The decision to halt shipments is driven by the need to maintain adequate U.S. military readiness and inventory levels [1] - This pause may impact Ukraine's defense capabilities amid ongoing conflicts [1] - The U.S. is reassessing its military support strategy in light of inventory concerns [1]

Core Viewpoint - The U.S. military utilized approximately 75 precision-guided munitions during the recent operation [1] Summary by Relevant Categories - Military Operations - The operation involved the deployment of around 75 precision-guided weapons by U.S. forces [1]

Core Points - Israel launched airstrikes against dozens of targets in Iran related to its nuclear program and military facilities, marking a significant escalation in regional tensions [1] - The operation involved close cooperation between the Israeli Defense Forces (IDF), the Mossad, and the Israeli defense industry, indicating a well-planned and long-prepared military action [1][3] - Israeli Prime Minister Netanyahu stated that the military actions against Iran would continue for several days, targeting Iran's nuclear facilities, ballistic missile factories, and military capabilities [4] Summary by Sections - **Military Operation Details** - The airstrikes involved over 200 Israeli aircraft, dropping more than 330 munitions, resulting in the deaths of senior Iranian military leaders and other commanders [3] - The operation was divided into three main parts: establishing a drone base near Tehran, deploying precision-guided weapons, and launching advanced strike systems from vehicles secretly entering Iran [3] - **Intelligence and Coordination** - The operation was characterized by detailed intelligence preparation from the IDF's military intelligence, aimed at precise strikes against key figures in Iran's security and nuclear programs [3] - **Reactions and Consequences** - Iranian Supreme Leader Khamenei warned of severe retaliation against Israel for the attacks, while the Iranian Revolutionary Guard vowed to respond decisively [4]

Group 1 - Israeli security sources report that the Mossad strike teams have deployed precision-guided weapons near the surface-to-air missile system base in central Iran [1]

Investment Rating - The report rates the defense and military industry as "Overweight" indicating a positive outlook for the sector compared to the overall market performance [5][29]. Core Insights - The military trade system's equipment progress has been officially validated by Pakistan, significantly enhancing the industry's valuation potential and the performance of related listed companies. The report suggests June as the best time to focus on this sector [5]. - The Chinese military trade advancements confirmed by Pakistan mark a milestone event, indicating a shift towards higher-end, higher-value products, thus opening up new market opportunities [5]. - The fundamental changes in the military industry are solidifying the upward trajectory of the sector, with rapid growth expected across all fields, particularly benefiting companies related to consumable weapons [5]. - The normalization of the two major satellite communication constellations is accelerating, with a preliminary completion of global networking expected by 2025, which will drive downstream applications and expand the scale of constellation construction [5]. - The report recommends increasing attention to the military sector, focusing on elastic/theme varieties, including precision-guided weapons, underwater capabilities, and advancements in AI/robotics [5]. Market Review - Last week, the Shenwan Defense and Military Industry Index rose by 0.41%, while the CSI Military Industry Leader Index increased by 0.37%. In comparison, the Shanghai Composite Index rose by 1.13%, and the ChiNext Index increased by 2.32%, indicating that the defense sector underperformed relative to the broader market [6][11]. - The report highlights the top five performing stocks in the defense sector, with North Chemical Co. leading at a 13.22% increase, followed by *ST Xinyan at 12.5% and Chengfei Integration at 11.58% [14]. Valuation Changes - The current PE-TTM for the Shenwan Military Industry Index is 63.85, placing it in the historical mid-range since January 2014, with a valuation percentile of 43.02% since January 2019 [15]. - The report provides a detailed valuation table for key companies in the defense sector, indicating projected net profits and PE ratios for the upcoming years [21].

Core Viewpoint - The recent developments in military technology and the emphasis on "new quality combat power" are expected to drive growth in the defense industry, with a focus on advanced weaponry and intelligent systems [3][4]. Group 1: Events - On May 11, the People's Daily highlighted the rapid development of a new round of technological revolution and industrial transformation, emphasizing the importance of high-tech weapons in modern warfare [3]. - The article discusses the need to study the characteristics of modern warfare and accelerate the development of new quality combat power as a pressing issue for building a first-class military [3]. Group 2: Institutional Interpretations - New quality combat power can be categorized into two main directions: new quality combat power and new quality productivity, with the former including advanced aircraft, drones, and long-range rockets that may change future battlefield operations [4]. - The government work report by Premier Li Qiang on March 5, 2025, emphasized the need to advance military training and the development of "new quality combat power," marking a new phase in the demand and application of new technologies and equipment [4]. - The military industry theme is expected to continue, with new quality combat power becoming a new growth engine, as military construction gradually enters an era of intelligence and automation [4]. Group 3: Investment Opportunities - The new quality combat power is anticipated to open up investment opportunities in the military sector, with a focus on precision-guided weapons expected to see initial growth by 2025 [5]. - Attention is drawn to the production capacity of underwater systems and the accelerated iteration of AI and robotics, which are seen as core to new quality combat power [5]. - The traditional aircraft industry chain is highlighted as having long-term investment value [5].

Investment Rating - The report gives a "Buy" rating for the company, marking the first coverage [5][9]. Core Insights - The company is a leader in the defense equipment sector, with high product barriers and a strong position in the precision-guided weapon market, which is expected to see increasing demand due to rising penetration rates and military exercises [1][36]. - The optical materials and components segment is experiencing a shift towards China, with the company holding a significant market share in high-quality optical glass materials [2][3]. - The company plans to raise up to 1.02 billion RMB through a private placement to enhance its production capabilities, which is expected to accelerate revenue growth [2][4]. Summary by Sections Company Overview - The company has a long development history, restructured in 2010 to form a new layout focusing on defense and optical materials [22][23]. - It is backed by the state-owned China North Industries Group, providing a stable ownership structure [23][25]. - The business is divided into two main segments: defense equipment and optical materials and components [26][32]. Defense Sector - The defense sector is seeing rapid advancements in information technology, with increasing demand for precision-guided weapons and optical information equipment [36][40]. - The global market for anti-tank missile systems is projected to grow from 20.9 billion RMB in 2023 to 25.2 billion RMB by 2030, with a CAGR of 2.6% [1]. - The company is positioned as a leading player in the large weapon systems field, with significant barriers to entry [44]. Optical Materials and Components - The optical materials segment is experiencing a broad range of applications, with a global market share of approximately 15% and a 30% share in China [2][3]. - The market for military helmet display systems is expected to grow from 430 million USD in 2023 to 680 million USD by 2030, with a CAGR of 6.8% [1][2]. Financial Projections - Revenue is projected to grow from 16.6 billion RMB in 2024 to 30.1 billion RMB in 2026, with a CAGR of 11% [3][4]. - The company anticipates a return to profitability by 2026, with net profits expected to reach 1.1 billion RMB [3][4]. Investment and Growth Potential - The company is set to benefit from the increasing demand for precision-guided products and the expansion of its optical materials production capacity [2][10]. - The expected revenue from the new projects post-expansion is estimated at 6.6 billion RMB for high-performance optical materials and 5.9 billion RMB for precision-guided products [2][4].