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Kawasaki Heavy Industries Ltd. (JP:7012)
:7012
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Kawasaki Heavy Industries
(7012)
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Rating:67Neutral
Price Target:
¥11,572.00
▲(2.95% Upside)
Kawasaki Heavy Industries demonstrates solid financial performance with strong revenue growth and a robust equity position. However, cash flow challenges and operational efficiency improvements are areas of concern. The earnings call provided a balanced view with significant achievements in revenue and innovation, but also highlighted profitability challenges and external pressures such as tariffs.
Positive Factors
Revenue Growth
Achieving record revenue indicates strong market demand and effective business strategies, supporting long-term growth and stability.
Innovation in Hydrogen and Robotics
Investments in hydrogen and robotics showcase commitment to innovation, positioning the company for future growth in emerging markets.
Strong Equity Position
A strong equity position with no reliance on debt enhances financial stability and provides flexibility for future investments.
Negative Factors
Cash Flow Challenges
Negative free cash flow growth indicates potential liquidity issues, which could hinder the company's ability to fund operations and growth.
Profitability Challenges
Profitability challenges from foreign exchange impacts may affect earnings stability, requiring strategic adjustments to mitigate risks.
Segment Weakness in Powersports
Weakness in the Powersports segment due to tariffs and demand decline could impact overall profitability and necessitate strategic realignment.
Kawasaki Heavy Industries (7012) vs. iShares MSCI Japan ETF (EWJ)
Market Cap
$1.79T
Dividend Yield1.32%
Average Volume (3M)5.36M
Price to Earnings (P/E)18.6
Beta (1Y)1.97
Revenue Growth14.12%
EPS Growth54.64%
CountryJP
Employees39,689
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)106.77
Shares Outstanding167,921,800
10 Day Avg. Volume5,883,960
30 Day Avg. Volume5,358,010
Financial Highlights & Ratios
PEG Ratio0.07
Price to Book (P/B)2.13
Price to Sales (P/S)0.70
P/FCF Ratio29.75
Enterprise Value/Market Cap1.47
Enterprise Value/Revenue1.21
Enterprise Value/Gross Profit6.00
Enterprise Value/Ebitda11.90
Forecast
1Y Price Target
$12,177.66Price Target Upside8.34% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Kawasaki Heavy Industries Business Overview & Revenue Model
Company DescriptionKawasaki Heavy Industries, Ltd. (TSE: 7012) is a diversified multinational corporation based in Japan, primarily engaged in the manufacturing of heavy machinery and equipment. The company operates across several sectors, including aerospace, defense, rolling stock (railway vehicles), shipbuilding, industrial equipment, and energy systems. Core products and services include aircraft, missile systems, railway vehicles, marine vessels, and various industrial machinery, showcasing its extensive engineering capabilities and innovation in technology.
How the Company Makes MoneyKawasaki Heavy Industries generates revenue through multiple key streams across its diverse business segments. The aerospace and defense division contributes significantly through contracts for military and commercial aircraft, as well as missile and defense systems. The rolling stock segment earns revenue from the production of trains and related infrastructure. Shipbuilding generates income from the construction of commercial and naval vessels. The industrial equipment segment provides machinery and systems for various industries, while the energy systems division focuses on power generation and environmental solutions. Strategic partnerships with governments and other corporations, along with long-term contracts, play a crucial role in stabilizing revenue, particularly in the defense and aerospace sectors, where projects often span several years.
Kawasaki Heavy Industries Earnings Call Summary
Earnings Call Date:Aug 06, 2025
(Q1-2025)
| % Change Since: |
Next Earnings Date:Feb 06, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted significant achievements such as record revenue and advancements in hydrogen and robotics. However, challenges in profitability and cash flow, as well as the impact of U.S. tariffs, balanced the positive aspects.Q1-2025 Updates
Positive Updates
Record Revenue and Year-on-Year Increase in Business Profit
The company achieved record revenue and a year-on-year increase in business profit for the first quarter of fiscal year 2025, meeting performance forecasts.
Segment Growth in Precision Machinery and Robot
Year-on-year increases were recorded for orders received, revenue, and business profit in the Precision Machinery and Robot segment.
Positive Forecast for Energy Solution and Marine Engineering
Forecasts for orders received, revenue, and business profit have been revised upward due to strong business environment and improved profitability of individual projects.
Innovations in Hydrogen and Robotics
The company commenced construction of the world's first commercial scale liquefied hydrogen base and demonstrated the world's longest remote robotic-assisted surgery.
Negative Updates
Decrease in Quarterly Profit Before Tax
Despite a year-on-year increase in business profit, there was a decrease in quarterly profit before tax due to foreign exchange gains contraction and other factors.
Challenges in Powersports and Engine Segment
Business profit decreased due to U.S. tariff costs and weakened demand in U.S. Powersports, leading to a downward revision of forecasts.
Free Cash Flow Deterioration
A loss of JPY 45.8 billion in free cash flows was recorded, a deterioration of JPY 43.3 billion year-on-year.
Company Guidance
In the first quarter of fiscal year 2025, the company reported record revenue of JPY 488.4 billion and a business profit of JPY 20.5 billion. However, quarterly profit before tax decreased to JPY 16.8 billion, primarily due to a JPY 3.2 billion negative impact from foreign exchange rates as the yen appreciated. Orders received totaled JPY 446.3 billion. Despite meeting the full year performance forecast, the company maintained its full year forecast unchanged, adjusting for U.S. tariff impacts and a revised exchange rate assumption of JPY 145 to the dollar and JPY 165 to the euro. The net debt-to-equity ratio was 78.7%, and a loss of JPY 45.8 billion was recorded in free cash flows. In segment analyses, Rolling Stock saw a business profit increase of JPY 5.1 billion due to improved profitability, while Aerospace Systems revised its business profit forecast upward by JPY 8.0 billion. The Energy Solution and Marine Engineering segment also raised its profit forecast by JPY 7.0 billion. Conversely, the Powersports and Engine segment faced downward revisions in both revenue and profit forecasts due to U.S. tariff costs and weakening demand. The company is also actively pursuing next-generation ventures, such as a commercial-scale liquefied hydrogen base and advancements in robotic-assisted surgery systems.Kawasaki Heavy Industries Financial Statement Overview
Summary
Kawasaki Heavy Industries demonstrates solid revenue growth and profitability with a strong equity position and no debt reliance. However, cash flow challenges and operational efficiency improvements are areas to watch.Income Statement
Kawasaki Heavy Industries shows a solid revenue growth rate of 2.08% TTM, indicating a positive trajectory. The gross profit margin of 20.27% and net profit margin of 4.13% TTM reflect stable profitability. However, the EBIT margin of 5.63% and EBITDA margin of 10.02% TTM suggest room for operational efficiency improvements.75
Positive
Balance Sheet
The company has a strong equity base with a debt-to-equity ratio of 0.0 TTM, indicating no reliance on debt financing. Return on equity is healthy at 13.20% TTM, showcasing effective use of equity. However, the equity ratio is not provided, limiting a full assessment of asset financing.70
Positive
Cash Flow
Operating cash flow is positive, but the free cash flow growth rate is negative at -26.26% TTM, indicating potential cash flow challenges. The operating cash flow to net income ratio of 0.08 TTM suggests limited cash generation relative to net income, while the free cash flow to net income ratio of 0.34 TTM shows some cash flow support.60
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.17T | 2.13T | 1.85T | 1.73T | 1.50T | 1.49T |
| Gross Profit | 437.93B | 431.54B | 312.24B | 333.82B | 253.26B | 191.16B |
| EBITDA | 220.70B | 239.98B | 130.22B | 154.01B | 109.92B | 50.36B |
| Net Income | 76.87B | 88.00B | 25.38B | 53.03B | 12.64B | -19.33B |
Balance Sheet | ||||||
| Total Assets | 2.97T | 3.02T | 2.68T | 2.46T | 2.17T | 1.96T |
| Cash, Cash Equivalents and Short-Term Investments | 73.90B | 144.55B | 95.18B | 138.42B | 119.12B | 126.70B |
| Total Debt | 820.54B | 889.51B | 845.23B | 785.26B | 501.48B | 571.35B |
| Total Liabilities | 2.17T | 2.29T | 2.03T | 1.86T | 1.65T | 1.48T |
| Stockholders Equity | 735.91B | 702.91B | 634.09B | 576.20B | 505.48B | 465.33B |
Cash Flow | ||||||
| Free Cash Flow | 37.06B | 50.26B | -48.40B | -35.33B | 97.95B | -17.09B |
| Operating Cash Flow | 117.57B | 148.94B | 31.66B | 23.62B | 156.89B | 34.60B |
| Investing Cash Flow | -123.21B | -111.20B | -89.81B | -77.46B | -58.40B | -37.39B |
| Financing Cash Flow | -30.25B | 9.61B | 12.91B | 85.31B | -108.90B | 23.09B |
Kawasaki Heavy Industries Technical Analysis
Positive
11240.00
Price Trends
10596.24
Positive
10214.40
Positive
9639.40
Positive
Market Momentum
145.66
Negative
58.68
Neutral
79.63
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7012, the sentiment is Positive. The current price of 11240 is above the 20-day moving average (MA) of 10434.85, above the 50-day MA of 10596.24, and above the 200-day MA of 9639.40, indicating a bullish trend. The MACD of 145.66 indicates Negative momentum. The RSI at 58.68 is Neutral, neither overbought nor oversold. The STOCH value of 79.63 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7012.
Kawasaki Heavy Industries Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | €95.29B | 9.75 | 5.02% | 3.23% | -10.00% | -51.92% | |
70 Outperform | $3.40T | 31.53 | 26.54% | 0.67% | -1.66% | 19.02% | |
69 Neutral | $1.74T | 23.19 | 16.00% | 1.29% | 13.96% | 12.97% | |
67 Neutral | $1.79T | 18.57 | 13.25% | 1.32% | 14.12% | 54.64% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
59 Neutral | €724.49B | 38.70 | 11.66% | 0.90% | 10.11% | 41.98% | |
59 Neutral | ¥527.25B | 155.64 | 0.59% | 2.89% | -2.67% | -85.21% |
* Industrials Sector Average
JP:7012
Kawasaki Heavy Industries
11,240.00
4,933.37
78.23%
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1,675.42
71.04%
JP:7013
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148.14%
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42.98%
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1,195.75
38.25%
JP:6104
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915.81
26.75%
Kawasaki Heavy Industries Corporate Events
Kawasaki Heavy Industries Reports Record Revenue Amid Profit Challenges
Nov 11, 2025
Kawasaki Heavy Industries reported a record revenue of 996.2 billion yen for the second quarter of FY2025, despite a decline in business profit due to yen appreciation and higher tariffs. The company raised its full-year revenue forecast to 2,340.0 billion yen, maintaining its business profit forecast at 145.0 billion yen, with expectations of stronger performance in the second half driven by defense contracts and increased after-sales services for aircraft engines.
Kawasaki Heavy Industries Reports Strong Half-Year Results with Revised Earnings Forecast
Nov 11, 2025
Kawasaki Heavy Industries announced its consolidated financial results for the six months ending September 30, 2025. The company reported a notable increase in revenue and profit compared to the previous year, reflecting strong operational performance. Despite the positive financial results, the company revised its earnings forecast for the fiscal year ending March 31, 2026, indicating adjustments in its financial expectations. The announcement underscores Kawasaki’s efforts to maintain its competitive position in the market while adapting to changing economic conditions.
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.