Group 1 - The core viewpoint indicates a strong performance in the defense sector, with the China Defense Index (399973) rising by 1.66% and notable increases in individual stocks such as China Haifang (600764) and Xiangdian Co. (600416), both up by 7.10% [1] - The global underwater unmanned vehicle (UUV) market reached a size of $1.96 billion in 2020, with a projected compound annual growth rate (CAGR) of 15.8% from 2021 to 2028, expected to reach $6.22 billion by 2028 [1] - The autonomous underwater vehicle (AUV) segment is anticipated to grow at a CAGR of 16.4%, outpacing the overall market growth [1] Group 2 - The military industry is approaching a critical turning point, with expectations that the current bull market will not conclude without a military sector rally [2] - Two transformative changes are anticipated in China's military industry by 2025: the disruption of traditional military growth ceilings through military trade and the emergence of new market demands driven by new types of combat capabilities, such as military applications of AI and robotics [2] - The Defense ETF closely tracks the China Defense Index, which includes listed companies under the ten major military groups and those providing weaponry to the armed forces, reflecting the overall performance of defense industry stocks [2] Group 3 - As of July 31, 2025, the top ten weighted stocks in the China Defense Index (399973) accounted for 43.88% of the index, with companies like AVIC Shenyang Aircraft (600760) and AVIC Engine (600893) among the leaders [3]

Investment Rating - The industry investment rating is "Add" (Maintain) [1] Core Viewpoints - The government work report for 2025 officially includes "deep-sea technology" as a key area of emerging industries, marking its elevation to a national strategy [1] - The strategic value of deep-sea technology lies in economic security and geopolitical competition, with significant resources and military applications [4] - Future technological breakthroughs in deep-sea technology will focus on intelligence, localization, and ecological balance [4] - Investment opportunities are identified in deep-sea materials, equipment, and detection technologies, with a recommendation to focus on leading companies with high technological maturity and clear policy support [4] Summary by Sections Government Policy and Strategic Importance - Deep-sea technology has been integrated into the national top-level design framework, with policies supporting its development outlined in the "14th Five-Year Plan" and the "Deep Sea Law" [4] - The government aims to promote the safe and healthy development of deep-sea technology through national-level research projects and coordinated development across the entire industry chain [4] Technological Focus Areas - Key technological advancements will include the integration of AI in deep-sea data processing, the localization of core equipment and materials, and the balance between development and ecological protection [4] - Specific areas of focus include deep-sea engineering equipment, information technology, and special materials processing [4] Investment Opportunities - Significant potential for domestic substitution exists in deep-sea materials (titanium alloys), equipment (submersibles/drilling platforms), and detection technologies (acoustic communication) [4] - Recommended companies for investment include Baotai Co., Ltd., Zhongke Haixun, Hailanxin, China Marine Defense, Changying Tong, Dongfang Cable, and Deepwater Haina [4]