Heavy Industries: Expect Solid Profit Growth at 1Q Results

研报英文原文证据摘录

Heavy Industries: Expect Solid Profit Growth at 1Q Results

IdeaMValuation Methodology and Risks

Mitsubishi Heavy Industries (7011.T)

Our price target applies the F3/26 one-year average NTM P/E of 40x to our F3/28 EPS forecast.

We set our target P/E at the recent historical average (which is higher than levels further in

the past), which we expect can be maintained thanks to a solid order backlog and demand

momentum.

Risks to Upside

n Faster progress in defense exports

n Higher Japan defense spending

n Upside in Energy and Defense capacity beyond assumed demand levels

Risks to Downside

n Slower than expected Energy throughput expansion

n Project-specific cost overruns

n Impact on production from Middle East geopolitical conditions and supply chain disrup-

tions

n Structural decline in power demand driven by advances in AI, semiconductor & server

technologies

Kawasaki Heavy Industries (7012.T)

Our price target is based on a 20.0x F3/26 one-year average NTM P/E applied to our F3/28e

forecast. We assume the P/E will hold at around the recent historical average, on the view that

weakness in the PS&E business, which has led to the valuation gap versus two peers, is largely

priced in,

n PS&E demand recovery on easing inflation & lower rates (esp, in US)

n Faster backlog clearance from ship & aircraft capacity expansion

n Business structure reforms

n PW1100G‑JM–related additional costs

n Heightened PS&E competition

n Prolonged ship & aircraft capacity expansion delaying sales

n Supply chain disruption (naphtha, rare metals) and price surges leading to output dis-

ruption and cost pressure

IHI (7013.T)

Our price target is reached applying a P/E of 21x to our F3/28e forecast. We expect the stock

to continue trading at a level around 10% below company's F3/26 one-year average NTM