Independent Insight Provider, Japanese equities, LightStream Research

Scott Foster

Independent Insight Provider, 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.

Equity Bottom-Up

Mitsubishi Heavy Industries / Equity Bottom-Up

<ul>
<li>MHI was sold off last week as FY Mar-24 operating profit fell short of guidance and management guided for a decline in new orders this fiscal year.</li>
<li>Orders momentum has peaked. Sales and profits will follow. But the latter are still rising and guidance could once again be conservative.</li>
<li>Consolidation of the share price is likely to continue until orders and profit trends are confirmed.</li>
</ul>


MHI was sold off last week as FY Mar-24 operating profit fell short of guidance and management guided for a decline in new orders this fiscal year.
Orders momentum has peaked. Sales and profits will follow. But the latter are still rising and guidance could once again be conservative.
Consolidation of the share price is likely to continue until orders and profit trends are confirmed.


Mitsubishi Heavy Industries (7011 JP): Orders Momentum Has Peaked

Japan Specialist

Mark Chadwick

<ul>
<li>MHI's stock fell 7% following the announcement of results. Guidance for FY3/25 missed analyst expectations</li>
<li>Even so, MHI remains a key beneficiary of the global shift to clean energy and national policies aimed at bolstering national security </li>
<li>We remain bullish. The stock has performed well this year and but 13x EV/EBIT seems reasonable given the structural drivers</li>
</ul>


MHI's stock fell 7% following the announcement of results. Guidance for FY3/25 missed analyst expectations
Even so, MHI remains a key beneficiary of the global shift to clean energy and national policies aimed at bolstering national security 
We remain bullish. The stock has performed well this year and but 13x EV/EBIT seems reasonable given the structural drivers


<ul>
<li>MHI's share price has risen more than 60% year-to-date and nearly tripled over the past 12 months on the improving outlook for Japanese defense contractors.</li>
<li>A huge increase in new orders, prospects for a doubling of sales and a rapidly rising operating margin on Aircraft, Defense &amp; Space have been factored into the price.</li>
<li>The shares do not look expensive compared with international comparables, but neither are they particularly cheap. Potential problems, from Japanese defense budget constraints to production glitches, have been ignored. </li>
</ul>


MHI's share price has risen more than 60% year-to-date and nearly tripled over the past 12 months on the improving outlook for Japanese defense contractors.
A huge increase in new orders, prospects for a doubling of sales and a rapidly rising operating margin on Aircraft, Defense &amp; Space have been factored into the price.
The shares do not look expensive compared with international comparables, but neither are they particularly cheap. Potential problems, from Japanese defense budget constraints to production glitches, have been ignored. 


Mitsubishi Heavy Industries (7011 JP): Take Profits and Wait for Reality to Catch Up

<ul>
<li>MHI reports impressive YoY growth in order intake, revenues, and profits across Energy Systems and Defense Equipment segments in Q2 2023.</li>
<li>Despite a 62% YTD stock price increase, strong order backlog and underlying drivers suggest resilience in a challenging economic climate.</li>
<li>The company benefits from global trends in decarbonization and increased national security spending, positioning itself as a leader in gas turbines and defense technology.</li>
</ul>


MHI reports impressive YoY growth in order intake, revenues, and profits across Energy Systems and Defense Equipment segments in Q2 2023.
Despite a 62% YTD stock price increase, strong order backlog and underlying drivers suggest resilience in a challenging economic climate.
The company benefits from global trends in decarbonization and increased national security spending, positioning itself as a leader in gas turbines and defense technology.


<ul>
<li>MHI remains our top pick on the energy transition in Japan and globally</li>
<li>The new next-gen nuclear reactor will be a significant improvement on the current technology and help Japan to become carbon neutral</li>
<li>We believe the stock is a bargain at book value and should be picked up on any correction</li>
</ul>


MHI remains our top pick on the energy transition in Japan and globally
The new next-gen nuclear reactor will be a significant improvement on the current technology and help Japan to become carbon neutral
We believe the stock is a bargain at book value and should be picked up on any correction


Mitsubishi Heavy Industries (7011) | New Nuclear Deal

Japan

Mitsubishi Heavy Industries, Ltd. is a comprehensive heavy machinery maker. The Company manufactures machinery, ships, turbines and engines, prime movers, aircrafts, and machine parts for military and commercial use.  Mitsubishi Heavy Industries also researches and develops nuclear power plants.

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Mitsubishi Heavy Industries (7011 JP)