Core Viewpoint - North Korea firmly opposes any external forces attempting to infringe upon its dignity, sovereignty, and security interests, and will take effective countermeasures in response to U.S. provocations [1][3]. Group 1: U.S. Actions and North Korea's Response - The U.S. State Department has designated North Korea as a "state sponsor of terrorism," marking its 29th consecutive year on this list since 1997 [3]. - North Korea's foreign ministry spokesperson stated that U.S. actions exacerbate hostile sentiments between the two nations [3]. - The designation restricts military exports and services to North Korea, alongside Cuba, Iran, Syria, and Venezuela [3]. Group 2: Military Preparedness and Training - Kim Jong-un emphasized the necessity of strengthening war preparedness during a recent air force exercise [5]. - He highlighted that the victory in war depends on rigorous training and called for all military units to be fully prepared for combat [5][6]. - Recent military drills included tactical training for special forces and tank units, showcasing the importance of a scientific combat training system [6][7]. Group 3: Nuclear Capabilities - Kim Jong-un stressed the central role of nuclear capabilities in war deterrence and the importance of maintaining a constant state of combat readiness [7]. - He called for improvements in the long-range precision strike capabilities and efficiency of weapon systems [7].

Investment Rating - The industry is rated positively, with expectations of overall returns exceeding the CSI 300 index by more than 5% in the next six months [37] Core Insights - China's defense budget has maintained a growth rate of around 7%, with defense spending accounting for less than 1.5% of GDP, which is below the average of major military powers. There is significant room for growth in defense spending, which is expected to outpace GDP growth in the long term. The year 2025 marks the end of the "14th Five-Year Plan," and the industry is anticipated to emerge from a two-year period of stagnation, entering a phase of comprehensive recovery. As orders normalize and are gradually released, the military industry sector may experience a "Davis Double Play" phase of performance improvement and valuation enhancement. It is recommended to focus on leading companies in advanced fighter jets, low-altitude economy, domestic large aircraft, satellite internet, and deep-sea technology, which have favorable competitive landscapes and high technological barriers [4][9] Summary by Sections Industry Insights - The defense budget growth rate is around 7%, with spending below 1.5% of GDP, indicating potential for significant growth. The military sector is expected to recover in 2025, with a focus on advanced technologies and leading companies [4][9] Market Performance - The aerospace and defense index increased by 7.95% this week, while the CSI 300 index rose by 2.00%. For the month, the aerospace and defense index saw an 18.24% increase compared to a 7.15% rise in the CSI 300 index [10] Industry News - India and Pakistan have agreed to a comprehensive ceasefire, which may impact regional defense dynamics [15] - The "China-Singapore Cooperation-2025" naval joint exercise has commenced, highlighting ongoing military collaborations [17] - NATO is conducting large-scale military exercises near the Russian border, involving approximately 16,000 troops from 12 countries [18] - The U.S. is providing decommissioned F-16s to Ukraine for parts, emphasizing ongoing military support amid the conflict [19] - Europe has initiated a project for future main battle tank technology, involving 26 military enterprises and research institutions [20] Company Tracking - Long光华芯 has received government subsidies totaling approximately 10.4 million RMB [23] - 派克新材 plans to reduce shareholding by up to 3% due to personal needs [24] - 亚光科技 signed a pre-production agreement worth 10.05 million RMB with a special institutional client [25] - 联创光电 has repurchased 113,400 shares, representing 0.03% of its total share capital [26] - 烽火电子 completed a share buyback of 1,344,300 shares, amounting to approximately 9.6 million RMB [27]

Core Viewpoint - North Korea conducted joint strike training involving long-range artillery and missile systems, emphasizing the enhancement of its nuclear capabilities and readiness [1] Group 1: Training Details - The training took place on May 8 and was guided by Kim Jong-un, utilizing 600mm multiple rocket launchers and "Mars-11" tactical ballistic missiles [1] - The exercise aimed to familiarize relevant troops with the operational procedures of these weapon systems under the national nuclear weapons management framework [1] Group 2: Strategic Emphasis - Kim Jong-un highlighted the importance of improving the central role of nuclear power in war deterrence and execution strategies [1] - The training showcased North Korea's ability to quickly respond to military situations created by adversaries in sensitive regions [1] - There is a continued commitment to enhancing the long-range precision strike capability and efficiency of weapon systems [1]