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Mitsubishi Heavy Industries Ltd (JP:7011)
:7011

Mitsubishi Heavy Industries (7011) AI Stock Analysis

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Mitsubishi Heavy Industries

(OTC:7011)

Rating:70Outperform
Price Target:
¥3,817.00
▲(12.17%Upside)
Mitsubishi Heavy Industries scores 70 overall, primarily driven by strong financial performance and a bullish technical outlook. The high P/E ratio and overbought technical indicators suggest caution, as valuation concerns may limit upside potential in the short term. The absence of notable earnings call insights or corporate events leaves the financial and technical aspects as the primary drivers of this score.
Positive Factors
Financial Performance
There are strong prospects for Mitsubishi Heavy Industries to achieve stronger sales and profit growth compared to the sector, with particularly robust fundamentals in the machinery sector.
Leadership
The next CEO's current position as the Chief Technology Officer implies MHI's expectation on the growth potential from a collaboration of digital innovation and its existing product lineup.
Market Sentiment
Analyst upgrades the stock rating of Mitsubishi Heavy Industries to Buy from Neutral due to its favorable sector-relative risk/reward profile.
Negative Factors
Project Management
MHI's participation in large-scale projects with insufficient preparation and its employees' strong sense of responsibility to fulfill customers' requests could have been a major factor behind the cost overrun in past years.
Strategic Actions
Tepid share price move even after press reports on a potential stake sale of forklift business illustrated that investors want a more influential action plan by MHI.

Mitsubishi Heavy Industries (7011) vs. iShares MSCI Japan ETF (EWJ)

Mitsubishi Heavy Industries Business Overview & Revenue Model

Company DescriptionMitsubishi Heavy Industries, Ltd. manufactures and sells heavy machinery worldwide. The company operates through Energy Systems; Plants & Infrastructure Systems; Logistics, Thermal & Drive Systems; and Aircraft, Defense & Space segments. It offers thermal, renewable energy, nuclear, engine, nuclear power generation, and chemical power plants, lithium-ion battery products, and oil and gas production plants, as well as fuel cells; civil aircrafts and engines, aviation equipment, and maintenance, repair, and overhaul of aircrafts; and launch vehicles and services, rocket engines, reaction control systems, space stations, rocket launchers, rocket engine combustion test facilities, and electronic parts. The company also provides passenger and commercial ships, LNG and LPG carriers, special purpose vessels, and IT services and systems; marine machineries, boilers, turbines, engines, and structures; and intelligent transport systems products and solutions, such as electronic toll collection system, road user charging system, highway traffic management system, EV management system, and development system. In addition, it offers organic solvent exhaust gas treatment system, waste-to-energy system, sludge treatment system, air quality control system, and bio-treatment system; turbochargers, car air-conditioning and refrigeration systems, rubber and tire machinery, and testing equipment; forklift trucks; and printing, paper converting, and metals, and food & packaging machinery, pumps, compressors & mechanical turbines, hydraulic components. Further, the company provides gas holders, vibration control systems, water pipes, tunnel excavation machinery, and cybersecurity solutions for industrial control systems; special vehicles, naval ship & maritime systems, defense aircrafts, helicopters, defense aeroengines, and guided weapon systems; and CO2 capture plants, as well as provides after-sales services. The company was founded in 1884 and is headquartered in Tokyo, Japan.
How the Company Makes MoneyMitsubishi Heavy Industries generates revenue through its diverse portfolio of products and services across multiple sectors. The energy systems division, which includes power generation equipment and solutions, contributes significantly to its earnings, especially with the global demand for energy-efficient and sustainable solutions. The industrial machinery segment provides machinery for various industries, including logistics, automotive, and chemical, generating substantial income through sales and maintenance services. The aerospace and defense sector is also a crucial revenue stream, with contracts for manufacturing aircraft, spacecraft, and defense equipment. Additionally, the shipbuilding and ocean development segment offers commercial and military vessels. MHI's extensive global partnerships and strategic collaborations further enhance its sales and market reach, allowing it to tap into new markets and drive growth.

Mitsubishi Heavy Industries Earnings Call Summary

Earnings Call Date:May 09, 2025
(Q3-2024)
|
% Change Since: 17.65%|
Next Earnings Date:Aug 01, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant growth in order intake, revenue, and profit across several segments, alongside strategic decisions like a stock split. However, there were challenges with negative free cash flow and decreased operating cash flow. Despite these lowlights, the overall sentiment of the call is positive due to strong performance and optimistic forecasts.
Q3-2024 Updates
Positive Updates
Significant Increase in Order Intake
Order intake through quarter 3 reached JPY 4,513 billion, equaling the full year FY 2022 level. The full-year forecast was raised by JPY 400 billion to JPY 6 trillion.
Revenue Growth Across All Segments
Revenue increased year-over-year across all segments, excluding a JPY 100 billion effect from foreign exchange rates. The company-wide full-year revenue forecast was raised by JPY 100 billion to JPY 4.4 billion.
Large Increases in Business Profit and Net Income
Business profit and net income showed large year-over-year increases due to revenue growth and price optimization efforts.
Positive Forecasts in Key Segments
Energy Systems, Logistics, Thermal and Drive Systems, and Aircraft, Defense and Space segments all saw increases in order intake, revenue, and profit forecasts.
Stock Split Decision
A 10-for-1 stock split was announced to meet Tokyo Stock Exchange guidelines and potentially lower the share trading price.
Negative Updates
Negative Free Cash Flow
Free cash flow was negative JPY 400 billion, JPY 200 billion lower than FY 2022, although large cash inflows are expected in quarter 4.
Decrease in Operating Cash Flow
Operating cash flow significantly decreased year-over-year due to an expansion in the top line and changes in the product mix.
Challenges in Plant and Infrastructure Systems
Order intake decreased year-over-year in the Plant and Infrastructure Systems segment, although revenue and profit increased.
Company Guidance
In the earnings call for the third quarter of 2024, Hisato Kozawa provided detailed guidance on several key financial metrics for the company. The order intake saw a significant year-over-year increase, reaching JPY 4,513 billion through the third quarter, matching the full year level of FY 2022, and the forecast for the full year was raised by JPY 400 billion to JPY 6 trillion. Revenue also increased across all segments, with foreign exchange effects contributing around JPY 100 billion to the growth, leading to an updated company-wide revenue forecast of JPY 4.4 billion. Business profit and net income also experienced substantial gains, attributed to price optimization and increased revenue. However, free cash flow was negative JPY 400 billion, primarily due to higher outflows from growth investments and reduced inflows from asset sales. Despite this, the company anticipates large cash inflows in the fourth quarter. Total assets increased by JPY 543.3 billion, driven by currency translation effects and asset acquisitions. The call also discussed specific segment performance, with notable increases in order intake, revenue, and profit in the Energy Systems and Logistics segments, leading to raised forecasts across these areas. Additionally, the Aircraft, Defense, and Space segment benefited from increased 787 deliveries and a weak yen, prompting an upward revision of the profit forecast to JPY 60 billion. Lastly, Kozawa announced a 10-for-1 stock split to align with the Tokyo Stock Exchange's guidelines.

Mitsubishi Heavy Industries Financial Statement Overview

Summary
Mitsubishi Heavy Industries shows strong financial performance with consistent revenue and profit growth, efficient operations, and robust cash flow generation. The balance sheet reflects a balanced leverage position and effective resource utilization. Key strengths include improved profit margins and significant cash flow generation, though maintaining leverage levels is essential.
Income Statement
85
Very Positive
Mitsubishi Heavy Industries shows strong performance in its income statement with consistent revenue growth over the years, reaching ¥5,027 billion in 2025 from ¥3,700 billion in 2021. The gross profit margin improved to approximately 20.5% from 15.8%, reflecting effective cost management. The net profit margin also increased, indicating improved profitability. The EBIT and EBITDA margins have shown upward trends, indicating efficient operations. Overall, the income statement reflects a robust growth trajectory and profitability improvement.
Balance Sheet
78
Positive
The balance sheet of Mitsubishi Heavy Industries is stable with a debt-to-equity ratio around 0.48, suggesting a balanced leverage position. The return on equity improved to approximately 10.5% in 2025, indicating effective utilization of equity capital. The equity ratio stands at about 35.2%, reflecting a relatively stable financial structure. Overall, the balance sheet shows a good mix of stability and efficient use of resources, though leverage remains a point to monitor.
Cash Flow
82
Very Positive
The company demonstrates strong cash flow generation with a notable increase in operating cash flow from ¥80.89 billion in 2023 to ¥530.46 billion in 2025. Free cash flow turned positive and grew significantly, indicating strong cash generation capability. The operating cash flow to net income ratio is solid, suggesting effective conversion of income to cash. Overall, the cash flow statement reflects a healthy liquidity position and improved cash management.
Breakdown
Mar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income StatementTotal Revenue
5.03T4.66T4.20T3.86T3.70T
Gross Profit
1.03T930.11B765.02B655.91B583.48B
EBIT
314.30B282.54B193.32B160.24B54.08B
EBITDA
560.24B488.38B370.86B307.43B284.02B
Net Income Common Stockholders
245.45B222.02B130.45B113.54B40.64B
Balance SheetCash, Cash Equivalents and Short-Term Investments
657.82B471.06B383.05B385.21B276.10B
Total Assets
6.66T6.26T5.47T5.12T4.81T
Total Debt
1.13T1.14T1.19T1.08T1.24T
Net Debt
473.46B711.68B844.77B764.02B990.59B
Total Liabilities
4.19T3.90T3.64T3.45T3.37T
Stockholders Equity
2.35T2.24T1.74T1.58T1.37T
Cash FlowFree Cash Flow
289.77B170.70B-51.02B156.31B-241.16B
Operating Cash Flow
530.46B331.19B80.89B285.56B-94.95B
Investing Cash Flow
-189.52B-131.05B-45.58B16.31B-182.25B
Financing Cash Flow
-112.32B-158.90B-18.90B-255.77B221.74B

Mitsubishi Heavy Industries Technical Analysis

Technical Analysis Sentiment
Positive
Last Price3403.00
Price Trends
50DMA
2828.53
Positive
100DMA
2559.84
Positive
200DMA
2337.92
Positive
Market Momentum
MACD
182.65
Negative
RSI
68.27
Neutral
STOCH
85.68
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7011, the sentiment is Positive. The current price of 3403 is above the 20-day moving average (MA) of 3176.72, above the 50-day MA of 2828.53, and above the 200-day MA of 2337.92, indicating a bullish trend. The MACD of 182.65 indicates Negative momentum. The RSI at 68.27 is Neutral, neither overbought nor oversold. The STOCH value of 85.68 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7011.

Mitsubishi Heavy Industries Peers Comparison

Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
70
Outperform
$11.44T46.5910.53%0.64%7.95%10.56%
66
Neutral
$4.49B12.345.40%248.65%4.13%-12.33%
$16.20B21.9425.94%0.73%
$12.37B21.6512.94%1.32%
$23.14B20.519.86%1.40%
$2.45B981.220.06%3.88%
73
Outperform
¥3.45T23.68
2.51%0.23%12.16%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
JP:7011
Mitsubishi Heavy Industries
3,403.00
1,977.96
138.80%
IHICF
IHI
105.31
80.99
333.02%
KWHIF
Kawasaki Heavy Industries
73.36
37.64
105.38%
NNDNF
Nidec
19.64
-3.97
-16.81%
SOHVF
Sumitomo Heavy Industries
20.12
-5.50
-21.47%
JP:6954
Fanuc Corporation
3,810.00
-530.52
-12.22%

Mitsubishi Heavy Industries Corporate Events

Mitsubishi Logisnext Reports Significant Financial Improvement
May 9, 2025

Mitsubishi Heavy Industries announced a significant improvement in the financial performance of its subsidiary, Mitsubishi Logisnext Co., Ltd., for the fiscal year ended March 31, 2025, compared to the previous year. The subsidiary reported a notable increase in ordinary and net profits, reflecting a positive impact on the company’s operations and potentially enhancing its market positioning.

Mitsubishi Heavy Industries Increases Year-End Dividend
May 9, 2025

Mitsubishi Heavy Industries announced a decision to increase its year-end dividend for the fiscal year ending March 2025 to 12 yen per share, up from the most recent forecast of 11 yen. This move aligns with the company’s policy of providing progressive dividends in line with profit growth, aiming for a Dividend on Equity of 4% or higher, reflecting a commitment to balancing business growth with financial stability.

Mitsubishi Heavy Industries Reports Strong FY2024 Financial Performance
May 9, 2025

Mitsubishi Heavy Industries reported a 7.9% increase in revenue for FY2024, reaching 5,027,176 million yen, with significant growth in profit from business activities and profit before income taxes. The company executed a ten-for-one stock split and announced a forecasted revenue of 5,400,000 million yen for FY2025, indicating a continued positive outlook for its financial performance.

Mitsubishi Heavy Industries Adjusts Subsidiary Liquidation Timeline
Mar 31, 2025

Mitsubishi Heavy Industries has announced a change in the expected completion date for the liquidation of its subsidiary, MHI Holding Denmark ApS, due to the time required to complete necessary procedures under Danish law. This change is not expected to impact the company’s consolidated financial results.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.