Summary of Conference Call Records Industry Overview - The focus is on the domestic large aircraft sector, which is experiencing significant growth and investment interest. The market is characterized by a contradiction between the long-term potential and short-term delivery challenges of domestic large aircraft [1][2]. Key Points and Arguments - **Bottleneck Breakthroughs**: The industry is entering a phase where critical bottlenecks, particularly in engines and onboard equipment, are being addressed. This is expected to accelerate the delivery of domestic large aircraft [1][2]. - **Market Sentiment**: There is a prevailing belief that the delivery pace of domestic large aircraft is slow, yet the long-term market potential remains vast. The resolution of bottlenecks is anticipated to lead to a steep change in expectations [1]. - **Catalysts for Growth**: Recent developments, such as the European Union Aviation Safety Agency (EASA) beginning flight evaluations for the C919 in Shanghai, are expected to enhance the global competitiveness of China's commercial aircraft [1]. Core Companies Mentioned - **Major Players**: - Two major companies: AVIC (中航机载) and Aero Engine Corporation of China (航发动力) are highlighted as key players in the engine and onboard equipment sectors [2]. - Four additional companies: AVIC Technology (航发科技), Jiangxi Aircraft Equipment (江航装备), Huayin Technology (华秦科技), and Wanzhe Co. (万泽股份) are also noted for their roles in the industry [1][2]. Additional Important Information - **Engine Development**: The Changjiang 1000 engine has entered the airworthiness certification phase, progressing faster than expected. This is crucial for addressing the backlog of main engine orders due to global supply constraints [2]. - **Onboard Equipment**: The push for domestic onboard products is ongoing, with regulatory support from the Civil Aviation Administration of China (CAAC) to expedite the approval of key products [2]. - **Diverse Sector Involvement**: The industry encompasses various segments, including engines, onboard equipment, landing gear, and airframe structures, with numerous companies involved across these categories [2]. This summary encapsulates the key insights and developments within the domestic large aircraft sector as discussed in the conference call records.

Market Overview - The aviation equipment sector experienced a decline of 2.09% on February 2, with Hangfa Technology leading the drop [1] - The Shanghai Composite Index closed at 4015.75, down 2.48%, while the Shenzhen Component Index closed at 13824.35, down 2.69% [1] Stock Performance - Notable gainers in the aviation equipment sector included: - Parker New Material (605123) with a closing price of 113.92, up 4.46% and a trading volume of 107,200 shares, totaling 1.258 billion yuan [1] - ST Lihang (603261) closed at 30.25, up 4.42% with a trading volume of 23,100 shares, totaling 69.8655 million yuan [1] - Beimo Gaoke (002985) closed at 41.74, up 3.88% with a trading volume of 330,400 shares, totaling 1.387 billion yuan [1] - Major decliners included: - Hangfa Technology (600391) closed at 48.99, down 5.61% with a trading volume of 229,800 shares, totaling 1.156 billion yuan [2] - Hangya Technology (688510) closed at 34.93, down 4.28% with a trading volume of 65,500 shares, totaling 234 million yuan [2] - Feilihua (300395) closed at 92.00, down 4.23% with a trading volume of 197,700 shares, totaling 1.875 billion yuan [2] Capital Flow - The aviation equipment sector saw a net outflow of 712 million yuan from institutional investors, while retail investors contributed a net inflow of 348 million yuan [2] - The capital flow for specific stocks showed: - Hangfa Power (600893) had a net inflow of 1.21 billion yuan from institutional investors, but a net outflow of 1.40 billion yuan from retail investors [3] - Parker New Material (605123) experienced a net inflow of 87.0047 million yuan from institutional investors, but a net outflow of 82.5030 million yuan from retail investors [3] - Hongdu Aviation (600316) had a net inflow of 64.4350 million yuan from institutional investors, while retail investors saw a net outflow of 78.6892 million yuan [3]

Investment Rating - The report maintains an "Overweight" rating for the defense and military industry, indicating a positive outlook for the sector compared to the overall market performance [5][26]. Core Insights - Recent geopolitical events and thematic catalysts have increased market interest in the military sector, with significant gains observed in commercial aerospace, large aircraft, and military trade segments. The industry is expected to continue its upward trajectory, supported by the implementation of the 14th Five-Year Plan and rising foreign trade expectations [5][6]. - The report highlights that the military industry is entering a new growth cycle, driven by modernization goals and increased defense spending as outlined in the recent policy meetings. The first half of 2026 is anticipated to see continued improvement in the industry's fundamentals, with a recovery in orders and performance [5][6]. - The domestic industrial policy is facilitating the development of commercial aerospace, with leading companies accelerating their IPO processes. The report emphasizes the importance of domestic demand growth and technological advancements in driving investment opportunities within the military sector [5][6]. Market Performance - Last week, the Shenwan Defense and Military Index rose by 4.37%, while the CSI Military Leaders Index increased by 6.82%. In comparison, the Shanghai Composite Index rose by 0.84%, and the CSI 300 Index fell by 0.62% [6][12]. - The report notes that the defense and military sector's performance ranked 10th among 31 Shenwan primary industry indices, with the average increase of the CSI Civil-Military Integration Index at 3.73% [6][12]. Stock Performance - The top five performing stocks in the defense and military sector last week were: - Aero Engine Corporation of China (40.45%) - Aerospace Electronics (22.6%) - Triangle Defense (21.24%) - Beimo High-Tech (20.46%) - Aero Engine Control (18.36%) [12][21] - Conversely, the bottom five performing stocks were: - *ST Aowei (-22.34%) - Shenjian Co. (-15.12%) - Aerospace Power (-12.68%) - Haige Communication (-9.23%) - Saiwei Electronics (-9.08%) [12][21]. Valuation Changes - The current PE-TTM for the Shenwan military sector is 103.17, placing it in the upper range historically, with a valuation percentile of 78.49% since January 2014 and 99.82% since January 2019. The aerospace and aviation equipment sectors are noted to be at relatively high valuation levels since 2020 [13][18].

Group 1 - The stocks of Hangfa Control and Hangfa Technology reached the daily limit, indicating strong market interest and investor confidence [1] - Tunan Co. saw an increase of over 10% in its stock price, reflecting positive market sentiment [1] - Other companies such as Hangya Technology, Hangfa Power, Guojijiangong, and Feiwo Technology also experienced stock price increases, suggesting a broader trend in the aerospace sector [1]

Group 1: Semiconductor Industry - Micron Technology has officially broken ground on an advanced wafer manufacturing facility in Singapore, planning to invest approximately $24 billion over the next decade, with production expected to start in the second half of 2028 [5] - The semiconductor industry is projected to transition from a cyclical recovery to a growth leap by 2026, with a focus on "AI foundation + domestic substitution" [6] - Puran Co. is expected to achieve a net profit of 205 million yuan by 2025, exceeding institutional expectations, driven by optimized supply in the storage chip market and demand from AI servers and high-end smartphones [10] Group 2: Advanced Packaging and AI Applications - The advanced packaging theme was discussed in a recent expert meeting, highlighting the increasing demand and technological iterations in this area, with Huada Technology seeing a maximum increase of 16.8% [12] - Dongxin Co. is actively exploring new application fields for AI, including autonomous driving and AI devices, with a maximum increase of 22.58% noted [14] Group 3: Aerospace Industry - COMAC plans to moderately increase the production and delivery of its C919 narrow-body aircraft, targeting the delivery of 28 or more units this year [21] - Aviation Power has been recognized for its position as a core engine manufacturer, benefiting from product diversification and increased production of civil aircraft, leading to a significant stock increase [21][24] - The domestic large aircraft theme was also discussed in an expert meeting, with Aviation Power and Aviation Control seeing maximum increases of 7.14% and 5.83%, respectively [27]

Core Viewpoint - The market showed signs of recovery with a total of 53 stocks hitting the daily limit up, while 18 stocks faced limit down, indicating a mixed sentiment among investors [1] Market Performance - The three major indices collectively turned positive, with the ChiNext Index rising over 1% at one point. The Shanghai Composite Index increased by 0.18%, and the Shenzhen Component Index rose by 0.09% [1] - The total trading volume in the Shanghai and Shenzhen markets was 2.89 trillion yuan, a decrease of 353.2 billion yuan compared to the previous trading day [1] Sector Analysis - The semiconductor, precious metals, computing hardware, and photovoltaic sectors led the gains, while coal, lithium batteries, agriculture, and biopharmaceuticals faced declines [1] - The semiconductor industry received a boost from Micron Technology's announcement of a $24 billion investment in a new flash memory factory in Singapore, which positively impacted related stocks [5] Stock Performance - Silver and precious metals stocks showed strong performance, with Silver Nonferrous achieving a six-day limit up streak, and other stocks like China Gold and Sichuan Gold also performing well [1][8] - The market's focus shifted towards stocks with performance certainty, as weaker stocks continued to struggle, leading to a rotation of funds towards sectors with more stable growth [3] Hotspot Analysis - The AI application sector saw a recovery with companies like Tiandi Online and Sanwei Communication experiencing significant rebounds [6] - The commercial aerospace concept began to recover, although the overall structure of the sector appeared chaotic, limiting the potential for sustained capital inflow [7] Future Outlook - The market is expected to continue its recovery trend, with a significant reduction in the number of stocks hitting the limit down, indicating a potential end to the recent downward adjustments [10] - The KDJ indicator for the Shanghai Composite Index has turned upward, suggesting a possible bullish trend if the MACD indicator follows suit [10]

Group 1 - The aviation equipment sector experienced a significant increase of 3.15% on January 27, with Triangular Defense leading the gains [1] - The Shanghai Composite Index closed at 4139.9, up 0.18%, while the Shenzhen Component Index closed at 14329.91, up 0.09% [1] - Key stocks in the aviation equipment sector showed notable price increases, with Triangular Defense rising by 11.15% to a closing price of 39.27, and Aviation Power increasing by 10.00% to 50.59 [1] Group 2 - The aviation equipment sector saw a net inflow of 2.13 billion yuan from major funds, while retail investors experienced a net outflow of 1.193 billion yuan [2] - Major stocks such as Aviation Power and Triangular Defense had significant net inflows from major funds, with Aviation Power receiving 5.55 billion yuan [3] - Retail investors showed a negative trend, with Triangular Defense experiencing a net outflow of 1.63 billion yuan [3]

Core Viewpoint - The A-share market showed a rebound in the afternoon, with significant gains in sectors such as semiconductors, precious metals, and computing hardware, leading to a slight increase in major indices [1][12]. Market Performance - The Shanghai Composite Index rose by 0.18% to close at 4139.98, the Shenzhen Component Index increased by 0.09% to 3342.60, and the ChiNext Index gained 0.71% to 14329.91 [2][12]. - Notable sector performances included precious metals, semiconductors, cultivated diamonds, and automotive chips, while sectors like aquaculture, animal vaccines, and coal mining experienced adjustments [14]. Individual Stock Highlights - Silver Holdings achieved a "6 consecutive boards" performance, while Aviation Power Technology hit a "7 days 4 boards" limit up, closing at 53.12 yuan per share with a market value of 17.536 billion yuan [3][15]. - Semiconductor stocks saw significant increases, with Dongxin Co. hitting a "20CM" limit up, and Huahong Semiconductor reaching a historical high with an intraday increase of over 9% [8][20]. Aerospace Sector Strength - The large aircraft concept gained strength in the afternoon, with Aviation Power Control and Aviation Power Technology both hitting the limit up [3][15]. - The commercial aerospace engine market in China is projected to exceed 2.6 trillion yuan over the next 20 years, with an estimated annual aftermarket value of around 100 billion yuan [6][18]. Semiconductor Sector Developments - The storage chip and co-packaged optics sectors showed active performance, with Dongxin Co. and other companies like Kangqiang Electronics and Huatiansheng Technology hitting limit ups [8][20]. - Micron Technology announced a plan to invest an additional $24 billion in Singapore over the next decade to expand capacity in response to the AI-driven demand for storage chips [10][22]. - The semiconductor industry is expected to experience significant market value growth, driven by AI demand and supply-side contractions, with a bullish outlook on domestic storage chain investment opportunities [10][22].

Group 1: Market Performance - Precious metals, semiconductors, cultivated diamonds, and automotive chips showed significant gains, while sectors like aquaculture, animal vaccines, and coal mining experienced adjustments [2] - Notable individual stocks included Silver Nonferrous (601212) achieving a "6 consecutive limit up," and Aviation Power Technology (600391) hitting a "limit up" after a "7 days 4 boards" performance [2][3] - Semiconductor stocks surged, with Dongxin Co. reaching a "20CM" limit up and Huahong Semiconductor hitting a historical high with a price increase of over 9% [2][9] Group 2: Aviation Sector - The large aircraft concept strengthened in the afternoon, with Aviation Power Control (000738) hitting a limit up and Aviation Power Technology closing at 53.12 CNY per share, giving it a market value of 17.536 billion CNY [3][5] - Aviation Power Technology is a core enterprise under the China Aviation Power Group, specializing in the production of aircraft engine and gas turbine components, and is a strategic supplier for several international aviation companies [7] - The commercial aviation engine market in China is projected to exceed 2.6 trillion CNY over the next 20 years, with an estimated annual aftermarket value of around 100 billion CNY [8] Group 3: Semiconductor Sector - The semiconductor sector saw a rebound, particularly in storage chips and co-packaged optics, with stocks like Kangqiang Electronics (002119) and Huada Technology (002185) also hitting limit up [9][10] - Micron Technology announced a plan to invest an additional 24 billion USD in Singapore over the next decade to expand capacity in response to the AI-driven demand for storage chips [11] - The semiconductor industry is expected to experience significant growth due to the explosion in AI demand and supply-side contractions, with storage chip prices currently on the rise [12]

Market Overview - The three major A-share indices opened lower on January 27, with the Shanghai Composite Index closing at 4139.9 points, up 0.18% [2] - The ChiNext Index rose by 0.71% to 3342.6 points, while the Sci-Tech 50 Index increased by 1.51% to 1555.98 points [2] Trading Activity - A total of 1928 stocks rose, while 3450 stocks fell, with 91 stocks remaining flat [3] - The total trading volume was 28.949 billion yuan, a decrease of 3.533 billion yuan from the previous trading day [3] Sector Performance - Semiconductor stocks saw significant gains, with over 20 stocks hitting the daily limit or rising more than 10% [5] - Gold stocks also performed well, with several stocks reaching the daily limit or increasing by over 10% [5] - Coal and basic metal sectors experienced notable declines, with major coal stocks dropping over 4% [6] Market Sentiment and Predictions - Financial analysts suggest that the A-share market may continue to experience fluctuations in the short term due to increased overseas uncertainties and pressure at previous high levels [7] - The current market is viewed as a short-term adjustment risk, with expectations for continued upward movement in the medium term [7] - Long-term perspectives indicate that the current market trend is still in its mid-stage, with potential for a "slow bull" market to continue [8][9] Investment Recommendations - Analysts recommend focusing on sectors such as technology, particularly AI and robotics, as well as industries benefiting from price increases like chemicals and non-ferrous metals [8][9] - Short-term investment opportunities are suggested in power equipment and photovoltaic sectors, which are supported by market demand and policies [10]