Investment decisions should be based on Golden麒麟 analyst research reports, which are authoritative, professional, timely, and comprehensive, helping you uncover potential thematic opportunities!
On January 11, 2026, Guotai Haitong Securities released its bi-weekly report on the defense industry, noting frequent recent developments in the global defense sector. China's space program achieved a record high of 92 launches in 2025, while the United States plans a significant increase in its military budget. Coupled with the long-term trend of intensifying major power competition, the defense industry's positive long-term outlook is clear.
China's space achievements are remarkable, with a record 92 launches in 2025. According to reports from Singapore's Lianhe Zaobao, China conducted 92 space launches throughout 2025, setting a new historical record and successfully placing over 300 satellites into their intended orbits, marking a qualitative improvement in both launch frequency and orbital deployment numbers. In 2025, China achieved multiple breakthroughs across various fields including manned spaceflight, deep space exploration, and commercial space, accomplishing several firsts: the Shenzhou-20 crew set a new Chinese record by performing a 204-day mission in orbit; Shenzhou-21 established a new record for rapid rendezvous and docking at 3.5 hours; China successfully conducted its first "16-day emergency launch" to address an unexpected spacecraft situation; Tianwen-2 embarked on China's first asteroid exploration and sample return mission; multiple types of commercial rockets conducted intensive launches, vigorously promoting the development of the commercial space sector.
Looking ahead to 2026, as the inaugural year of the "15th Five-Year Plan," China's manned lunar landing project will conduct multiple tests. The Chang'e-7 mission will travel to the lunar south pole to search for evidence of water ice. Several new rocket models are scheduled for their maiden flights and will challenge reusability technologies, as China's space program steadily advances towards its goal of becoming a major space power.
The global defense landscape is active, with significant moves in US military spending and equipment upgrades. Recent activity in the international defense sector has been constant. On January 7th, US President Trump proposed increasing the US military budget for the 2027 fiscal year from $1 trillion to $1.5 trillion, aiming to build a "dream military" to address the current turbulent and dangerous international situation. Simultaneously, the US Pentagon announced a substantial increase in the production of Patriot interceptor missiles. Under a seven-year agreement, Lockheed Martin will ramp up annual production of the Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) from approximately 600 to 2,000 units, aiming to meet the long-term demands of the US military and its allies.
Furthermore, the US Air Force has designated Northrop Grumman's new autonomous unmanned loyal wingman, "Claw," with the designation YFQ-48A, as the leading candidate for its Collaborative Combat Aircraft program. This UAV possesses advanced collaborative capabilities and can partner with manned fighter jets to execute various combat missions. US media statistics indicate a surge in US overseas airstrikes in 2025, with at least 626 airstrike operations conducted throughout the year, a significant increase compared to the total during the four-year term of former President Biden.
Other nations are also actively advancing their defense and space sectors. Russia's State Atomic Energy Corporation, Rosatom, plans to develop a prototype megawatt-class nuclear-powered space engine by 2030 and is engaged in deep cooperation with Roscosmos on a lunar orbital station project. Meanwhile, Iran's Foreign Minister stated that Iran is prepared for war in any potential scenario, while remaining willing to engage in negotiations based on mutual respect.
The defense sector demonstrates strong performance, with multiple areas attracting attention. In terms of market performance, the defense sector stood out last week (January 5 - January 9, 2026). The Shanghai Composite Index rose by 14.56%, the ChiNext Index gained 3.89%, and the National Defense Military Index surged in sync by 14.56%, outperforming the broader market by 10.74 percentage points and ranking first among 29 industries. Major defense indices all showed positive upward trends, with the CS Aerospace and Aeronautics Index rising 15.36%, delivering the most impressive performance.
Within the sector, the defense informatization segment performed relatively well. Stocks such as Galaxy Electron (60.96%), Nanjing Panda (维权) (49.10%), and Zhenlei Technology (维权) (48.18%) led the gains. Recent important breakthroughs have also occurred domestically; the LQ-150, a 200kg-class large-payload, long-endurance composite-wing UAV system independently developed by China North Industries Group's Aisheng Group, successfully completed its maiden flight. The reliability of its self-developed low-cost multi-purpose flight control system and universal mission payload servo mechanism was fully verified. This UAV boasts advantages such as high performance, low cost, and strong environmental adaptability, making it suitable for wide application in scenarios like surveying, mapping, exploration, and emergency rescue.
Guotai Haitong Securities points out that the international environment is increasingly complex and severe, with intensifying major power competition being a long-term trend. The focus of the US and its allies' defense strategies is gradually shifting towards the Indo-Pacific, potentially leading to a gradual escalation of tensions around China. Ensuring the achievement of the centennial goal for military development by 2027 is imperative, and the "15th Five-Year Plan" period is expected to see accelerated efforts to address shortcomings in the defense sector. Winning modern wars requires advanced fighter jets and missiles as decisive tools, cost-effective equipment like rocket artillery to sustain prolonged conflicts, and, crucially, reliable communication and command systems for support. The firm recommends focusing on key sectors such as aerospace equipment development and frontier hotspots like satellite internet.
Regarding investment themes, the institution recommends attention to four major areas: first, final assembly companies like AVIC Shenyang Aircraft, Aerospace Nanhu, and AVIC Xi'an Aircraft; second, component suppliers such as AVIC Optoelectronics, Unigroup Guoxin Microelectronics, and Shaanxi Huada; third, subsystem providers including Aero Engine Corporation of China, AVIC Aviation Systems, and North Navigation; fourth, materials and processing firms like AVIC Hi-Tech, Philstone, and Guangwei Composites. The report also cautions investors to be aware of risks such as potential underperformance in the expansion of military product supply chains and failure to meet performance expectations in civilian business segments.
Comments