Minsheng Securities: Various types of equipment are displayed together at the Zhuhai Airshow, highlighting the future development trend of smart and information-based equipment.

Livelihood Securities released a research report stating that the recent Zhuhai Air Show showcased China's advanced and diverse equipment system to the world. The debut of new generation equipment greatly boosted confidence in the future development of the military industry. Future equipment development may show the following trends: 1) Equipment iteration may accelerate, integrating more cutting-edge technologies such as intelligence and information technology; 2) Operational requirements for equipment may increase, while equipment exports may become more open; 3) Trends such as full-domain warfare, integrated land, sea, air, and space operations, and manned/unmanned cooperation may become more prominent and necessary; 4) Exploration of new productive forces may become more open, such as low-altitude economy, domestic large aircraft, satellite internet, etc., but attention should be paid to changes in industrial development stages and application penetration rates. Event: From November 12th to 17th, 2024, the biennial event - the 15th China International Aviation & Aerospace Exhibition (Zhuhai Air Show) was held in Zhuhai City, Guangdong Province. This edition of the air show created a new dynamic demonstration pattern of "integration of air, space, sea, and land", presenting exciting performances of "manned + unmanned", "on-site + remote", "land + sea", with a total contract amount exceeding 280 billion RMB. Main points of Livelihood Securities: New generation aviation equipment made appearances together, with J-35A fighter being the highlight of this air show. Aviation Industry Group showcased multiple advanced fighters, unmanned equipment, cargo space planes, helicopters, and more at this air show, with over 260 exhibits covering sea, land, air, and space fields. The two new generation stealth fighters, J-20S and J-35A, appeared together for the first time, demonstrating China's accelerated development trend in aviation equipment iteration. In terms of unmanned equipment, the "Wing Loong" series, "Rainbow" series, and "Feihong" series of unmanned aerial vehicles gathered together, with UAVs playing a key role in the modern equipment system, transitioning from auxiliary combat equipment to main combat equipment. Guided equipment, full-domain air defense, and anti-drone equipment were systemically showcased. China Aerospace Science & Industry Group presented six major systems of full-domain offense and defense equipment, with over a hundred exhibited products. The guided equipment system from Aerospace Science & Industry Group's 2nd Institute was displayed, able to construct a multi-layer air defense system. In addition, the anti-drone system products were more diverse, capable of intercepting manned and unmanned aircraft at low-altitude/super-low-altitude. Furthermore, electronic countermeasures continued to upgrade, such as the debut of the FK-4000 equipment system, which can achieve "shooting, artillery, light, wave, interference" kill defense, and can cooperate with other equipment for full-domain interception. We believe that the accelerated development of unmanned equipment and the rapid development of anti-UAV equipment and the construction of a reliable aerial defense system are particularly important. Multiple eVOTLs made appearances and secured orders, soaring in the low-altitude economy. The Zhuhai Air Show set up a special low-altitude economy exhibition hall, with various eVTOL and UAV products making impressive appearances. Xiaopeng Huitian's "Land Carrier" secured over 2000 orders, while companies like Volocopter, Volante, and Fengfei Aviation are accelerating airworthiness certification. Overall, China's low-altitude aircraft development has made significant progress, and attention should be focused on new infrastructure construction, especially the development and implementation of smart low-altitude air traffic control systems, including national airspace reform, resource release, and approval for low-altitude flight activities. Recommendations to focus on: 1) Leading companies: AVIC Shenyang Aircraft, AVIC Jonhon Optronic Technology, Avic Aviation High-Technology, Avic Xi'An Aircraft Industry Group, Jiangxi Hongdu Aviation Industry, AECC Aviation Power, Avic Heavy Machinery, Western Superconducting Technologies, Avic (Chengdu) UAS, etc.; 2) Guided equipment: Hubei Feilihua Quartz Glass, Beijing Relpow Technology, Chengdu Zhimingda Electronics Co., Ltd., Yangtze Optical Electronic, North Navigation Control Technology, Jiangxi Guoke Defence Group, etc.; 3) New fields and qualities: Aerospace Nanhu Electronic Information Technology, Shaanxi Huaqin Technology Industry, Geovis Technology Co., Ltd, Guanglian Aviation Industry, Shaanxi Huada Science Technology, Xi'an Bright Laser Technologies, Hunan Aerospace Huanyu Co.Communication Technology (688523.SH), and Weihai Guangwei Composites (300699.SZ);State-Owned Enterprise Reform: AECC Aero-Engine Control (000738.SZ), Guobo Electronics (688375.SH), China Aerospace Times Electronics (600879.SH), Glarun Technology (600562.SH), Sun Create Electronics (600990.SH), AVIC Airborne Systems (600372.SH), Aerospace CH UAV (002389.SZ), etc. Risk Warning: Technical risks, product price declines, changes in industry policies, etc.