Analysis from Orient Securities Company Limited suggests that the critical push for core technologies, particularly commercial engines, has accelerated. Achieving a major milestone breakthrough is expected to significantly alter market expectations regarding the delivery pace of large aircraft. The batch production milestone for commercial engines is approaching, making engine modules and components a favorable investment segment.
The CJ-1000A engine has entered the final sprint phase of airworthiness certification and is anticipated to obtain its certification by 2027. The firm believes that successful certification is likely to trigger an inflection point for mass production. The market currently undervalues the importance, strategic position within the supply chain, and derivative value potential of core engine suppliers, with the CJ-1000A potentially representing just its first commercial application branch. Within the components sector, the outlook is positive for turbine blades. As the commercial engine batch production milestone nears, supply-demand tensions are expected to intensify, favoring sustained improvement in the order-to-revenue ratio and bargaining power of related suppliers. Key points from Orient Securities Company Limited are outlined below.
National Security Imperatives Drive Supply Chain Resilience, Commercial Engine Development Set to Accelerate
The C919 aircraft utilizes a global "main manufacturer + supplier" model for its supply chain. Recent years have seen tight overseas engine production capacity, coupled with fluctuating export attitudes from foreign nations regarding engines, which has previously disrupted C919 supply chains and led to delayed deliveries. The market currently underestimates the top-level resolve to expedite supply chain development and accelerate breakthroughs in core areas like engines. The development of the Yangtze River engine has entered a critical phase in 2026, with implementation being pursued under a "wartime" mechanism, ethos, discipline, and policy to ensure the achievement of objectives and decisively win the model development campaign. The firm contends that the core technology push, exemplified by commercial engines, has already sped up. A significant milestone breakthrough would lead to a notable shift in expectations for large aircraft delivery rates.
Airworthiness Certification is the Key Node for Engine Batch Production, Yangtze River Engine Enters Critical Phase
The CJ-1000A has entered the final stage of airworthiness certification and is expected to achieve certification around 2027. Engine and aircraft airworthiness certifications are conducted separately under CCAR-33 and CCAR-25 regulations, respectively. Following the civil aircraft certification process, an engine must first independently obtain its airworthiness certificate before being installed on an aircraft. The aircraft with the engine then requires verification of compatibility to complete its own airworthiness certification, after which it can be delivered to customers. Referencing the certification and volume ramp-up history of CFM's first engine, the CFM56-2, which was certified in November 1979, the adapted DC-8-71 aircraft achieved certification in April 1981—a 17-month gap. Subsequently, annual deliveries of the CFM56 series engines reached 300 and 900 units in 1984 and 1991, respectively, marking a leap in growth. The process from certification to volume production for the DC-8-71 re-engining provides a replicable experience path for the C919 and CJ-1000. The firm believes the CJ-1000A is now approaching a pivotal moment akin to the CFM56-2 in 1981, with successful certification poised to usher in a mass production inflection point.
Module Segment Favors Core Engine, High Technical Density and Derivative Potential
If the engine is the "heart" of an aircraft, the core engine is the "heart" of the engine itself. It represents the most technologically intensive part of the entire engine, operating under the most severe conditions, with its performance directly determining the engine's thrust and efficiency. "Derivative development" from a core engine is an internationally proven, highly efficient R&D and manufacturing model. By equipping a mature core engine with different components like fans, low-pressure turbines, and afterburners, a series of engines for various applications—covering military, civil, and gas turbine fields—can be rapidly derived. GE's eCore is the foundational core for the derivative development of the LEAP engine series. The firm argues that the market insufficiently appreciates the importance, supply chain position, and derivative value of core engine suppliers, suggesting the CJ-1000A may be only its first commercial application branch.
Components Segment Favors Turbine Blades, High Difficulty, Barriers, and Scarcity
Among various engine components, turbine blades are characterized by high technical difficulty, significant entry barriers, and slow capacity expansion. Furthermore, due to extreme operating conditions (high temperature and centrifugal stress), turbine blades are typical life-limited parts, requiring mandatory replacement when "creep" deformation reaches 80%-90% of its limit, thus possessing greater aftermarket value than the initial market. The current global supply constraints from gas turbines to aero-engines are primarily bottlenecked by the rigid supply constraints of turbine blades. Current market focus on the blade segment is more concentrated in the gas turbine field. The high overlap between aero-engine and gas turbine supply chains has led to competition for capacity in tight segments like blades, causing engine production progress to increasingly lag behind airframe production. The firm believes that as the commercial engine batch production milestone approaches, supply-demand imbalances in the turbine blade segment will intensify, favoring a continued rise in the order-to-revenue ratio and bargaining power of related suppliers.
Risk Factors
Potential delays in airworthiness certification; potential delays in large aircraft delivery schedules.