On October 27, the defense and military sector remained active, with the popular Defense and Military Industry ETF (512810) rising over 1%, breaching the 20-day moving average during trading with a real-time transaction volume of 63 million yuan.
Among the constituent stocks, China Zhenhua (Group) Science&Technology Co.,Ltd. hit its daily limit, gaining over 8%. Other stocks such as Zhuzhou Hongda Electronics Corp.,Ltd., Western Superconducting Technologies, and GD Infrared also saw significant increases. Conversely, AVIC High-Tech, Great Wall Military Industry, and Huafeng Technology all fell by more than 1%.
In terms of news, on October 26, North Navigation published its Q3 report, achieving an operating revenue of 2.468 billion yuan and a net profit attributable to shareholders of 111 million yuan, with a stable gross profit margin of 20.32%. This highlights both the profit elasticity in the military support field and the effectiveness of order fulfillment.
As of now, 17 constituent stocks of the Defense and Military Industry ETF (512810) have reported Q3 earnings, with 15 showing profitability and 9 reporting year-on-year net profit growth. Notably, Chuqiang New Materials saw its net profit soar by 20 times year-on-year, while North Navigation and Huali Chuangtong both experienced a doubling of net profit.
Hua Chuang Securities noted that the enhancement of national defense capabilities has been included as part of the long-term vision for 2035, amidst significant and complex changes in the current development environment. National defense strength is deemed essential for social stability and development, as well as for "grasping strategic initiative," advancing manufacturing overseas, and promoting the internationalization of the yuan, emphasizing the importance of building advanced combat capabilities.
Hua Fu Securities predicts that from 2025 to 2027, driven by multiple catalysts including the "14th Five-Year Plan sprint," the centenary goal of the military, and rapid development in military trade, both domestic and international demand in the defense and military industry will surge significantly. Coupled with expectations of strong fundamental recovery in 2025, the sector currently holds high allocation value. With the approach of the 15th Five-Year Plan, a new prosperity cycle in the industry is expected from Q4 2025 to 2026.
The Defense and Military Industry ETF (512810) passively tracks the CSI Military Index, whose top ten weighted stocks include China Shipbuilding, AVIC Shenyang Aircraft Corporation, Guoke Technology, Aero Engine Development, AVIC Optical, AVIC Xi'an Aircraft, China Great Wall, Ruichuang Micro-Nano, Filihua, and Aerospace Electronics.
Data sourced from the Shanghai and Shenzhen stock exchanges, public information, etc.
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