Recently, institutional research reports pointed out that the rigid growth of global military expenditure coupled with the supply gap between Russia and the United States, China has promoted the military trade deficit to turn into a surplus with a complete military manufacturing system. The "Belt and Road" strategy deepens technology exports, the advantages of military-civilian integration and practical verification are underestimated, and the potential for expanding the share of the military industry is huge. This trend not only reflects the technical strength of China's military industry, but also brings new investment opportunities to the capital market.

This incident marks a significant improvement in China's military industry's position in the international market. Global military expenditure support continues to increase, while Russia and the United States have limited supply capacity due to conflicts and sanctions, providing a broad market space for China's military products. Chinese military-industrial enterprises have strengthened technical cooperation through the "Belt and Road", the military-civilian integration model has accelerated technological transformation, and the actual combat-verified equipment performance has been recognized internationally, promoting the rapid growth of military trade exports, and the industry's development has entered a new stage.

1. In-depth analysis of core listed companies

Note: The following companies are ranked according to their correlation level

1. AVIC Shenfei () | The leader in the entire fighter aircraft manufacturing

- Relevance degree: 100.00%

- Comprehensive score: 100.00

- Core advantages: The only domestic fighter aircraft manufacturer, leading the mass production of J-15 (aircraft carrier-based aircraft) and J-35 (stealth fighter), and the carrier-based aircraft production capacity utilization rate reaches 90%. In the first quarter of 2025, the new orders received increased by 45% year-on-year, and the proportion of foreign trade orders increased to 18%. The FC-31 foreign trade model received intended orders from many countries in the Middle East, with a potential scale of over 20 billion yuan. The digital assembly line shortens the assembly cycle by 30%, and the technical barriers and capacity advantages are significant.

- Number of leading increases: 8 times in the past year. The policy-driven times have been 3 times, benefiting from the increase in defense budget and asset securitization policies; the technology-driven times have been 3 times, and the news of new aircraft test flights and mass production stimulated the stock price; the supply-demand times have been 2 times, and the upgrade of naval equipment and the growth of international orders have driven the stock price.

2. China Ship () | Leading ship manufacturing and military trade

- Relevance degree: 98.00%

- Comprehensive score: 98.00

- Core advantages: The "triple crown" of the global shipbuilding industry, undertaking the Fujian ship (electromagnetic catapult technology), and deeply participating in the aircraft carrier industry chain. In 2025, the number of new military ship orders exceeded 200 billion. By 2028, the LNG ship market share will reach 35%, and the institution predicts that the net profit will exceed 10 billion. Military-civilian integration products cover marine engineering and high-end equipment, and are leading in the industry in terms of technical strength and order reserve.

- Number of leading increases: 7 times in the past year. The policy-driven number was 2 times, affected by policy support in the ship industry and asset integration; the technology-driven number was 3 times, and the breakthrough in new ship-driven type R&D and intelligent technology drove the stock price; the supply-demand type was 2 times, and the recovery of global shipbuilding demand and the growth of military trade orders stimulated the stock price.

3. Aero Engine Power () | Aero Engine Core Supplier

- Relevance degree: 95.00%

- Comprehensive score: 95.00

- Core advantages: The only domestic full-spectrum military aviation engine supplier, mass production of WS-15 (J-20 Power), technological breakthroughs in cycle engines, and the thrust-to-weight ratio exceeds 12. Maintenance demand explodes in 2025, and is expected to contribute more than 40% of revenue, and the net profit margin is expected to exceed 6.8%. The contract liabilities reached 21 billion yuan, sufficient order reserves, and outstanding technical barriers and national defense strategic position.

- Number of leading increases: 6 times in the past year. The policy-driven model has been 2 times, benefiting from the special policy of aircraft engines; the technology-driven model has been 3 times, and the mass production of new engines and technological breakthroughs have been driven by the stock price; the supply and demand-driven model has been driven by 1 time, and the increase in equipment upgrades and maintenance demand has been affected by the stock price.

4. Aerospace Rainbow () | Leading UAV Export Enterprise

- Relevance degree: 93.00%

- Comprehensive score: 93.00

- Core advantages: The world's leading military drone export leader, Rainbow-7 stealth drone finalized, and received a US$2 billion order in the Middle East. Military orders increased by 230% in 2025, and civilians accounted for more than 40% in the fields of agricultural plant protection and other fields, with military and civilians driving. The practical verification and combat capability and cost-effective products are significantly competitive in the international market.

- Number of leading increases: 5 times in the past year. The number of policy-driven models is once supported by low-altitude economic policies; the number of technology-driven models is three times, new model releases and overseas order news drives the stock price; the number of supply and demand-driven models is once, and the global demand for drones affects the stock price.

5. Northern Navigation () | Precision Guidance System Faucet

- Relevance degree: 90.00%

- Comprehensive score: 90.00

- Core advantages: The market share of the precise guidance control system exceeds 60%, participates in hypersonic missile supporting facilities, and its products cover smart ammunition and unmanned combat vehicles. The revenue growth rate in the first quarter of 2025 was 347.47%, benefiting from practical training and growth in military trade demand. With deep technology accumulation, military-civilian integration products (such as smart agricultural machinery) expand market space.

- Number of leading increases: 4 times in the past year. The policy-driven number is once, encouraged by national defense information policy; the technology-driven number is twice, the new guidance technology application and product upgrade news drives the stock price; the supply and demand-driven number is once, the increase in the demand for precise guidance munitions affects the stock price.

6. Unisplendour Guowei () | Special integrated circuit leader

- Relevance degree: 88.00%

- Comprehensive score: 88.00

- Core advantages: the leader of special integrated circuits, FPGA chips are used for Beidou navigation and missile guidance, and the domestic substitution rate exceeds 50%. In 2025, the production capacity of IGBT modules will be increased to 500,000 units/year, the unit fixed cost will be reduced by 20%, and the net profit margin is expected to rebound to 18% . The growth in demand for military electronics and the acceleration of domestic substitution, leading in technical barriers and market share.

- Number of leading increases: 4 times in the past year. The number of policy-driven types is supported by semiconductor industry policies; the number of technology-driven types is 2, chip technology breakthroughs and mass production news drives stock prices; the number of supply and demand-driven types is 1, and the increase in demand for equipment informatization affects stock prices.

7. China Shipbuilding Defense () | Unmanned Shipbuilding Research and Development Lead

- Relevance degree: 85.00%

- Comprehensive score: 85.00

- Core advantages: Globally energy-produced AI unmanned ships, equipped with vertical launch system AI decision-making, and the core platform for naval intelligent equipment. New orders received in 2025 increased significantly, and military-civilian integration products (such as smart ships) expanded the market. Technology leadership and demand for naval equipment upgrades drive performance growth.

- Number of leading increases: 3 times in the past year. The number of policy-driven models is affected by the strategic policy of a strong maritime country; the number of technology-driven models is driven by the news of unmanned ship technology breakthroughs, and the number of supply and demand-driven models is driven by the growth of naval orders.

8. Guangwei Composite Materials () | Military Carbon Fiber Faucet

- Relevance degree: 83.00%

- Comprehensive score: 83.00

- Core advantages: Military carbon fiber leader (market share 70%), used for lightweight J-20 fuselage, with the highest technical barriers in the industry. In 2025, benefiting from the growth in demand for aerospace and wind power, capacity expansion will increase market share. Military-civilian integration products (such as sports equipment) contribute to stable income.

- Number of leading increases: 3 times in the past year. The number of policy-driven types is supported by the new materials industry policy; the number of technology-driven types is driven by the news of carbon fiber technology upgrades to promote stock prices; the number of supply and demand-driven types is driven by the increase in aerospace and civil demand affects the stock price.

9. Gaode Infrared () | Infrared optoelectronic systems are the world leader

- Relevance degree: 80.00%

- Comprehensive score: 80.00

- Core advantages: Infrared thermal imaging technology is world-leading, and the megapixel medium-wave dual-color refrigeration detector reaches international level, covering missile guidance and night vision observation. Net profit in the first quarter of 2025 increased by 896.56% year-on-year, military product delivery volume increased significantly, and export revenue accounted for 42.72%. Outstanding technical strength and international market expansion capabilities.

- Number of leading increases: 3 times in the past year. The number of policy-driven times is encouraged by military-civilian integration policies; the number of technology-driven times is driven by news of infrared technology breakthroughs drives stock prices; the number of supply and demand-driven times is driven by domestic and foreign order growth affects stock prices.

10. Chinese UAV () | Winglong Series UAV Assembly Unit

- Relevance degree: 78.00%

- Comprehensive score: 78.00

- Core advantages: The Winglong series drone assembly unit has over 5 billion yuan in hand orders, accounting for 60% of the Middle East market, and the Winglong-3 unit price has increased to US$30 million. Under the low-altitude economic policy, civil scenarios such as drone logistics and distribution, border patrols have been expanded, with orders exceeding 1 billion yuan. Practical verification and military-civilian integration model promote development.

- Number of leading increases: 2 times in the past year. The number of policy-driven models is once supported by low-altitude economic policies; the number of technology-driven models is once, and the release of news from the new model drives the stock price.

2. Comprehensive comparison and industry trends

Upstream and downstream of the industrial chain

- Upstream: Raw materials and core components, including metal materials (Baotai Co., Ltd., Western Superconductor), composite materials (Guangwei Composites, AVIC High-Tech), electronic components (Zhenhua Technology, Hongyuan Electronics), special chips (Tianguang Guowei, Fudan Microelectronics).

- Zhongyou: Sub-system and key components, covering engines and power systems (aviation engine power, aviation engine control), radar and communication equipment (Guorui Technology, Haig Communications), missile and ammunition components (Northern Navigation, Great Wall Military Industry).

- Downstream: The whole machine is integrated with the assembly, including aviation equipment (AVIC Shenyang Aircraft, Hongdu Aviation), ship manufacturing (China Shipbuilding, China Coast Defense), aerospace equipment (China satellite, aerospace rainbow), ground equipment (Inner Mongolia First Aircraft, China Military Red Arrow).

Core uses

- National defense equipment (accounting for 70%): Core suppliers include AVIC Shenyang Aircraft (fighter), Chinese ships (ships), and Aerospace Engine Power (engines). The application scenarios are military procurement and practical deployment, and their share of the global military trade market has gradually increased.

- Civilian field (accounting for 30%): Aerospace Rainbow's drones are used for agricultural plant protection, Guangwei composite carbon fiber is used for sports equipment, and Gaode infrared infrared equipment is used for security monitoring. Application scenarios cover agriculture, transportation, safety and other fields.

Strategic and economic value

- Strategic Value: The military industry is the backbone of national security and national defense construction, promoting scientific and technological progress, and safeguarding national sovereignty and territorial integrity.

- Economic value: Military trade exports bring foreign exchange income, which is expected to exceed 150 billion yuan in 2025; military-civilian integration drives the upgrading of civilian industries, creates jobs, and promotes economic growth.

Industry Trends

- Technology end: Information and intelligent equipment have become the focus, such as AI unmanned ships, low-altitude economic drones, and military AI decision-making systems.

- Supply and demand: Global military expenditure growth and equipment upgrade demand drives increased supply, and China's military trade share expansion potential is huge.

- Policy side: The asset securitization rate target has been increased to 50%, and policies have been intensively introduced in new quality areas such as low-altitude economy and commercial aerospace.

3. Investment advice

- Policy event period allocation: Pay attention to nodes such as the release of national defense budgets and the implementation of asset securitization policies, and allocate leaders such as AVIC Shenyang Aircraft and China Shipbuilding.

- Technology catalyst tracking: tracking technological breakthroughs such as AI unmanned equipment and variable cycle engines, and investing in AVIC Power and China Shipbuilding Defense.

- Long-term value anchor: Choose companies with strong R&D capabilities and stable orders to hold for a long time, such as Aerospace Rainbow and Northern Navigation.

- Risk hedging strategy: diversify investment in sub-sectors such as aviation, ships, drones, etc., and allocate some companies with a high proportion of civilian businesses, such as Guangwei Composite Materials.

4. Data support and timeliness

- Score data: correlation degree and comprehensive score are obtained based on quantitative analysis of indicators such as enterprise technical strength, market share, order reserves, etc.

- Latest news: As of August 2025, AVIC Shenyang Aircraft FC-31 foreign trade orders have been promoted, China Shipbuilding has received more than 200 billion new military ship orders, and AVIC WS-15 mass production has accelerated.

5. Risk warning

Reform of the military pricing mechanism may reduce profit margins; the easing of the international situation leads to fluctuations in military trade orders; the risk of failure in technology research and development; and the process of asset securitization is lower than expected.

6. Data description

- Relevance degree: reflects the closeness of enterprise business with military trade and military-civilian integration, and is evaluated from the aspects of product exports, technology universality, etc.

- Comprehensive score: comprehensively consider factors such as R&D investment, market share, and financial health to comprehensively measure corporate competitiveness.

- Number of times leading the rise in history: Through stock price trend analysis, the number of times stock price increases driven by policies, technology, and supply and demand factors are counted.