Japan Specialist

Mark Chadwick

Over 20 years experience in equities and asset management in Asia and Japan. Qualified CFA with experience analyzing companies as a buy-side analyst. In-depth knowledge of company fundamental analysis, corporate governance and valuations.

Equity Bottom-Up

Kawasaki Heavy Industries / Equity Bottom-Up

<ul>
<li>
 Valuation disconnect: At 10× EV/EBITDA, KHI trades too cheaply given 21% defense exposure and highest forward EBITDA growth among Japanese heavy industrials.</li>
<li>
 Technical oversold: Down 15% versus market -1%, with RSI at 35 suggesting excessive selling relative to fundamentals and peer declines of 10-11%.</li>
<li>
 Aerospace recovery ahead: Commercial travel rebound, end of PW1100G losses, and defense production growth should drive margin expansion despite weak Q2 results.</li>
</ul>



 Valuation disconnect: At 10× EV/EBITDA, KHI trades too cheaply given 21% defense exposure and highest forward EBITDA growth among Japanese heavy industrials.

 Technical oversold: Down 15% versus market -1%, with RSI at 35 suggesting excessive selling relative to fundamentals and peer declines of 10-11%.

 Aerospace recovery ahead: Commercial travel rebound, end of PW1100G losses, and defense production growth should drive margin expansion despite weak Q2 results.


KHI (7012): Oversold on Governance Fears, Undervalued on Defense Growth