Hong Kong stocks concept tracking | Major powers game escalates with increased national defense investment Military industry long-term positive (with concept stocks)

On March 5, the Third Session of the 14th National People's Congress revealed that China's defense budget for 2025 is 1.7846.65 trillion yuan, a year-on-year increase of 7.2%, maintaining a growth rate of over 7% for the fourth consecutive year. In addition, the government work report explicitly proposes to "accelerate the development of new quality combat capabilities" and "promote the safe and healthy development of emerging industries such as commercial aerospace and low-altitude economy". Zhonghang Securities pointed out that multiple "big military" tracks will continue to expand the military market space. Guotai Junan believes that the intensification of great power competition is a long-term trend. The strategic focus of the United States and its allied defense is gradually shifting towards the Indo-Pacific. Tensions around China's periphery may gradually escalate, and peace requires defense. Increasing defense investment is a necessary option, and the long-term trend of military industry is positive. In 2027, it is necessary to ensure the realization of the centenary goal of building the army. It is expected to accelerate the filling of gaps during the 14th Five-Year Plan period. CITIC Securities released a research report stating that with the recovery of downstream military demand, the high-end titanium industry is expected to return to growth. The industry's competitive landscape is relatively benign; looking ahead, demand is expected to be prosperous in high-end fields such as aerospace, ships, and oceans, and with the combination of downward raw materials and economies of scale, enterprise profits are expected to expand. China's military trade is gradually transitioning from low-end and low-priced exports to high-end weapons exports, especially in the context of the large-scale update and replacement of domestically produced equipment in recent years, some military products have strong competitiveness internationally. In the future, as China's international political status gradually rises, domestically produced military trade products are expected to further increase their global market share. Hong Kong-listed military industry-related companies: AVICHINA (02357): AVICHINA is the aviation equipment comprehensive listed platform under the Aviation Industry Corporation of China, holding four A-share listed companies: AVICOPTER PLC, Jiangxi Hongdu Aviation Industry, AVIC Airborne Systems, and Jonhon Optronic Technology. The company points out that with the acceleration of commissioned demand and the impending military replacement, foreign trade business may become a growth point for the trainer aircraft industry; the injection of domestically produced large aircraft will bring incremental growth, and its subsidiaries are core suppliers. Cssc Offshore & Marine Engineering (00317): The company's main business is to integrate marine defense equipment, marine transport equipment, marine development equipment, and marine technology application equipment. The shipbuilding industry maintains a good trend, with the company's order structure continuously optimized, production tasks full, total production volume and production efficiency steadily improving, and ship product income and product gross profit increasing year-on-year; the operating performance of the company's joint ventures is improving, and the level of dividends from associated companies is increasing, confirming an increase in investment income year-on-year.