Japan Specialist

Mark Chadwick

Equity Bottom-Up

Kawasaki Heavy Industries / Equity Bottom-Up

<ul>
<li>KHI's Group Vision 2030 progress report (6 Oct 2026) raised its FY3/31 revenue target to ¥3.3tn+ (from ¥3tn+), with business profit (BP) of ¥330bn+</li>
<li>The 10%+ margin and the 8% FY3/28 milestone are unchanged. The upgrades sit in defence and datacentre power.</li>
<li>We have reset our model to the plan: FY3/31E BP ¥332bn and cumulative FY3/28–31E FCF of ¥72bn. We set a target price of ¥3,200 (+35%) and remain bullish.</li>
</ul>


KHI's Group Vision 2030 progress report (6 Oct 2026) raised its FY3/31 revenue target to ¥3.3tn+ (from ¥3tn+), with business profit (BP) of ¥330bn+
The 10%+ margin and the 8% FY3/28 milestone are unchanged. The upgrades sit in defence and datacentre power.
We have reset our model to the plan: FY3/31E BP ¥332bn and cumulative FY3/28–31E FCF of ¥72bn. We set a target price of ¥3,200 (+35%) and remain bullish.


Kawasaki Heavy Industries (7012 JP) | Growth Now, Cash Later

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

<ul>
<li>Expect continued buying in defense related, as well as banks and life insurance, renewable energy, rails, and medical IT plays with Shigeru Ishiba at the helm. </li>
<li>The Market will be quick to rotate out of names which spiked into Friday's close on expectation for a Sanae Takaichi win in the LDP election.  </li>
<li>Ishiba has been a vocal critic of Abenomics, and his potential policies aimed at higher taxes for investment incomes and capital gains are set to weigh on the Japanese market. </li>
</ul>


Expect continued buying in defense related, as well as banks and life insurance, renewable energy, rails, and medical IT plays with Shigeru Ishiba at the helm. 
The Market will be quick to rotate out of names which spiked into Friday's close on expectation for a Sanae Takaichi win in the LDP election.  
Ishiba has been a vocal critic of Abenomics, and his potential policies aimed at higher taxes for investment incomes and capital gains are set to weigh on the Japanese market. 


Best Outright and Pair Trades for an Ishiba-Led LDP

Pan-Asia Tactical Market Calls (Quant-Driven), MRM Research

Nico Rosti

Pan-Asia Tactical Market Calls (Quant-Driven)

MRM Research

Quantitative Research

Equity Derivatives

Kawasaki Heavy Industries / Equity Derivatives

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kawasaki-heavy-industries" target="_blank" data-smartkarma-citation="entities:8790:1" rel="noopener">Kawasaki Heavy Industries (7012 JP)</a> cash flow remains highly constrained, failing to comfortably cover the group's legacy debt obligations. </li>
<li>The stock price dropped down to JPY 2,690 (July 14) and it is currently consolidating around JPY 2,725 as of mid-July 2026, breaking below its 200-day moving average.</li>
<li>The stock's <strong>sell-off appears tactically exhausted according to our model, a rebound rally from here could reach the 3000 price zone in 2-3 weeks.</strong>
</li>
</ul>



Kawasaki Heavy Industries (7012 JP) cash flow remains highly constrained, failing to comfortably cover the group's legacy debt obligations. 
The stock price dropped down to JPY 2,690 (July 14) and it is currently consolidating around JPY 2,725 as of mid-July 2026, breaking below its 200-day moving average.
The stock's sell-off appears tactically exhausted according to our model, a rebound rally from here could reach the 3000 price zone in 2-3 weeks.



Kawasaki Heavy Ind (7012)Tactical Outlook: Exhausted Sell-Off, Possible Rally to 3K

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>KHI's new share and CB issues will fund production upgrades while strengthening the balance sheet. Potential dilution should be in the price.</li>
<li>The share price has been declining since March as overbought defense contractors were sold off. That is coming to an end. MHI has started to recover. </li>
<li>Collaboration with Airbus and Eurodrone is another reminder that Japan's defense build-up is not driven by the wars in Ukraine or the Persian Gulf. </li>
</ul>


KHI's new share and CB issues will fund production upgrades while strengthening the balance sheet. Potential dilution should be in the price.
The share price has been declining since March as overbought defense contractors were sold off. That is coming to an end. MHI has started to recover. 
Collaboration with Airbus and Eurodrone is another reminder that Japan's defense build-up is not driven by the wars in Ukraine or the Persian Gulf. 


KHI (7012 JP): Production Upgrades & Drone Deal with Airbus

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Capital Markets

Kawasaki Heavy Industries / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kawasaki-heavy-industries" target="_blank" data-smartkarma-citation="entities:8790:1" rel="noopener">Kawasaki Heavy Industries (7012 JP)</a> is down about 9% outright since a Reuters article mid-day 1 July suggested they'd be raising equity.  TOPIX is up tiny in the same period. </li>
<li>An equal-weighted basket of <a href="https://www.smartkarma.com/entities/mitsubishi-heavy-industries" target="_blank" data-smartkarma-citation="entities:13613:1" rel="noopener">Mitsubishi Heavy Industries (7011 JP)</a> and <a href="https://www.smartkarma.com/entities/kawasaki-heavy-industries" target="_blank" data-smartkarma-citation="entities:8790:1" rel="noopener">Kawasaki Heavy Industries (7012 JP)</a> is up 2.25%. The KHI/Peers ratio had already come off recent highs too.</li>
<li>At a discount today's close, this looks like a good deal relative to peers, but it isn't a total no-brainer.</li>
</ul>



Kawasaki Heavy Industries (7012 JP) is down about 9% outright since a Reuters article mid-day 1 July suggested they'd be raising equity.  TOPIX is up tiny in the same period. 
An equal-weighted basket of Mitsubishi Heavy Industries (7011 JP) and Kawasaki Heavy Industries (7012 JP) is up 2.25%. The KHI/Peers ratio had already come off recent highs too.
At a discount today's close, this looks like a good deal relative to peers, but it isn't a total no-brainer.


[Japan Offering] Kawasaki Heavy (7012) Deal Probably Prices Today

Japan

Kawasaki Heavy Industries, Ltd. designs, develops, and manufactures transport equipment and industrial heavy machinery for military and commercial use.  The Company produces ships, railroad cars, aircraft engines and parts, hydraulic and gas turbines, submarine engines, boilers, and industrial robots.  Kawasaki Heavy Industries offers engineering and construction services to industrial plants.

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Kawasaki Heavy Industries (7012 JP)