In-depth Analysis of Great Wall Military Industry (601606) Limit-Up: Driving Factors and Valuation Risks

Great Wall Military Industry (601606) is a core military enterprise under China South Industries Group, mainly engaged in the R&D and production of ammunition and weaponry [0]. This limit-up was driven by three core factors:

1. Geopolitical Catalyst
   : Tensions in China-Japan relations stimulated a general rise in the military sector [7], and this stock led the rise as a sector leader;
2. Restructuring Expectations
   : The indirect controlling shareholder, China South Industries Group, was approved for spin-off restructuring, and the market has strong expectations for the company’s future integration [2];
3. Capital Inflow
   : The main net inflow reached 866 million yuan on November 17, supporting the stock price breakout [8].
   Technical analysis shows that the stock price broke through the suppression of multiple moving averages, forming a clear upward trend [0].

1. Fundamentals Disconnected from Valuation
   : The company had a net loss of 363 million yuan in 2024, and although revenue increased by 10.79% in the first three quarters of 2025, it still lost 17.767 million yuan [0]. The current market value of 38.78 billion yuan far exceeds the historical highest net profit of 136 million yuan (2021), with obvious bubbles [0];
2. Event-Driven Market
   : The stock price rise mainly relies on external events (geopolitics, restructuring) rather than endogenous growth, and sustainability is questionable [0];
3. Sector Linkage Effect
   : The military sector was boosted by geopolitical factors as a whole, but this stock’s increase far exceeded its peers, indicating excessive speculation [0].

• Valuation Bubble
  : Market value and profitability are seriously mismatched, with high correction risk [0];
• Weak Fundamentals
  : Continuous losses have not improved, and there is insufficient performance support [0];
• Event Fade Risk
  : Easing geopolitical tensions or the failure of restructuring expectations may trigger a sharp drop in stock prices [0].

• Short-Term Sector Heat
  : Geopolitical tensions may maintain short-term activity in the sector [0];
• Potential Restructuring Benefits
  : If restructuring is implemented, it may bring opportunities for business optimization [0].

The limit-up of Great Wall Military Industry (601606) is the result of the combined force of geopolitics, restructuring expectations, and capital, but the stock price is seriously disconnected from fundamentals, with obvious valuation bubbles. Investors should be alert to short-term volatility risks and pay attention to substantive signals of fundamental improvement and restructuring progress.