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Kawasaki Heavy Industries (JP:7012)
:7012
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Kawasaki Heavy Industries (7012) AI Stock Analysis

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JP:7012

Kawasaki Heavy Industries

(OTC:7012)

Rating:71Outperform
Price Target:
¥12,039.00
▲(19.26% Upside)
Kawasaki Heavy Industries' overall stock score is driven by strong financial performance and positive technical indicators. However, valuation concerns and mixed earnings call sentiment slightly dampen the outlook. The company's leverage and cash flow management remain areas to watch.

Kawasaki Heavy Industries (7012) vs. iShares MSCI Japan ETF (EWJ)

Kawasaki Heavy Industries Business Overview & Revenue Model

Company DescriptionKawasaki Heavy Industries, Ltd. (7012) is a diversified multinational corporation headquartered in Japan. The company operates across various sectors including aerospace, shipbuilding, rolling stock, energy systems, and industrial equipment. It is renowned for its innovation and engineering expertise, producing a wide range of products such as motorcycles, jet engines, ships, railway vehicles, and industrial robots. Kawasaki Heavy Industries leverages its technological capabilities to deliver solutions that contribute to industrial development, transportation, and infrastructure projects worldwide.
How the Company Makes MoneyKawasaki Heavy Industries generates revenue through its diversified business operations, which are segmented into several key areas. The Aerospace Systems division manufactures aircraft engines and components, servicing both commercial and defense sectors. The Energy System & Plant Engineering segment provides equipment and services for power plants, industrial machinery, and environmental solutions. The Ship & Offshore Structure division designs and constructs ships and marine structures, catering to both commercial and military clients. The Rolling Stock division supplies railway vehicles and systems to transportation operators globally. Additionally, the Motorcycle & Engine segment sells motorcycles, ATVs, and personal watercraft. The company's Industrial Equipment division offers a range of products including industrial robots and machinery. Revenue streams are bolstered by strategic partnerships, government contracts, and continuous innovation in technology and engineering solutions.

Kawasaki Heavy Industries Earnings Call Summary

Earnings Call Date:Aug 06, 2025
(Q1-2025)
|
% Change Since: -9.30%|
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with significant achievements in revenue, certain segments, and innovations, but also faced challenges in profitability, certain segments, and cash flow. The highlights and lowlights were balanced.
Q1-2025 Updates
Positive Updates
Record Revenue and 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 the performance forecast.
Rolling Stock Segment Improvement
Earnings in the Rolling Stock segment increased due to improved profitability and recovery from previous declines, with a year-on-year increase in business profit of JPY 5.1 billion.
Energy Solution and Marine Engineering Growth
Revenue and business profit increased, with orders received revised upward by JPY 10.0 billion due to increased power generation facilities orders and demand from the Ministry of Defense.
Precision Machinery and Robot Segment Success
Year-on-year increases were recorded for orders received, revenue, and business profit, with forecasts revised upward due to increased demand in hydraulic machinery.
Innovations in Hydrogen and Medical Robotics
Commencement of construction for the world's first commercial liquefied hydrogen base and successful demonstration of the world's longest remote surgery using the hinotori robotic-assisted surgery system.
Negative Updates
Decreased Quarterly Profit Before Tax
Despite increased business profit, there was a decrease in quarterly profit before tax and net profit due to a contraction of foreign exchange gains from yen appreciation.
Aerospace Systems Segment Challenges
Business profit decreased in the Aerospace Systems segment due to declining profitability and a temporary decline in revenue, although there was an increase in orders received.
Negative Free Cash Flow
A loss of JPY 45.8 billion in free cash flows was recorded, a deterioration of JPY 43.3 billion year-on-year.
Powersports and Engine Segment Decline
Business profit decreased due to yen appreciation and higher fixed costs, with forecasts revised downward due to U.S. tariffs and weakening demand.
Company Guidance
In the fiscal year 2025 first quarter results call, the company reported record revenue of JPY 488.4 billion and a business profit increase to JPY 20.5 billion, although quarterly profit before tax was JPY 16.8 billion and quarterly profit attributable to owners of the parent decreased to JPY 4.2 billion. Despite the appreciation of the yen affecting foreign exchange gains, the full-year forecast remains unchanged, with exchange rate assumptions adjusted to JPY 145 to the dollar and JPY 165 to the euro. The company highlighted segment performances, such as an increase in Rolling Stock business profit by JPY 5.1 billion due to improved profitability and effective control of fixed costs. In contrast, Powersports and Engine saw a decrease in business profit owing to U.S. tariff costs and weakening demand. The company also focused on promoting a decarbonized society through projects like the construction of a liquefied hydrogen base and advancements in medical robotics, with expected profitability in the Medicaroid Corporation by next fiscal year. The company maintained its annual dividend per share at JPY 150.

Kawasaki Heavy Industries Financial Statement Overview

Summary
Kawasaki Heavy Industries demonstrated robust financial performance with substantial revenue growth and improved profit margins. The balance sheet shows a moderate leverage position, and while cash flow management has improved, further optimization is needed.
Income Statement
78
Positive
Kawasaki Heavy Industries showed robust performance with significant revenue growth from 2024 to 2025, demonstrating a revenue growth rate of approximately 15.1%. The gross profit margin improved to about 20.3% in 2025, reflecting enhanced cost management. Net profit margin increased to around 4.1%, indicating stronger profitability. The EBIT and EBITDA margins have also shown substantial improvement, suggesting better operational efficiency.
Balance Sheet
70
Positive
The company's debt-to-equity ratio in 2025 is approximately 1.27, indicating a moderate leverage position. The return on equity (ROE) improved to about 12.5%, showcasing effective utilization of equity for generating profits. The equity ratio, standing at around 23.3%, suggests a balanced capital structure but highlights potential risks associated with high leverage.
Cash Flow
65
Positive
Kawasaki Heavy Industries demonstrated a strong recovery in free cash flow, achieving a positive free cash flow growth from 2024 to 2025. The operating cash flow to net income ratio of approximately 1.69 suggests effective cash generation from core operations. However, the free cash flow to net income ratio remains lower, indicating room for improvement in cash management strategies.
BreakdownMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue2.13T1.85T1.73T1.50T1.49T
Gross Profit431.54B312.24B333.82B256.58B191.16B
EBITDA216.80B130.22B157.46B124.33B50.36B
Net Income88.00B25.38B53.03B21.80B-19.33B
Balance Sheet
Total Assets3.02T2.68T2.46T2.02T1.96T
Cash, Cash Equivalents and Short-Term Investments132.78B84.15B149.16B114.47B126.70B
Total Debt889.51B845.23B785.26B501.48B571.35B
Total Liabilities2.29T2.03T1.86T1.52T1.48T
Stockholders Equity702.91B634.09B576.20B479.18B465.33B
Cash Flow
Free Cash Flow50.26B-64.88B-46.33B82.03B-17.09B
Operating Cash Flow148.94B31.66B23.62B144.43B34.60B
Investing Cash Flow-111.20B-89.81B-77.46B-52.54B-37.39B
Financing Cash Flow9.61B12.91B85.31B-102.34B23.09B

Kawasaki Heavy Industries Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price10095.00
Price Trends
50DMA
10562.96
Negative
100DMA
9604.17
Positive
200DMA
8273.88
Positive
Market Momentum
MACD
46.18
Positive
RSI
37.33
Neutral
STOCH
9.89
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7012, the sentiment is Neutral. The current price of 10095 is below the 20-day moving average (MA) of 10740.50, below the 50-day MA of 10562.96, and above the 200-day MA of 8273.88, indicating a neutral trend. The MACD of 46.18 indicates Positive momentum. The RSI at 37.33 is Neutral, neither overbought nor oversold. The STOCH value of 9.89 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:7012.

Kawasaki Heavy Industries Peers Comparison

Overall Rating
UnderperformOutperform
Sector (71)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$1.35T18.2916.02%1.58%16.57%6.63%
74
Outperform
¥2.52T23.8923.85%0.72%17.79%
72
Outperform
¥696.74B37.2210.57%0.78%9.43%21.15%
71
Outperform
¥267.81B14.798.32%2.78%6.12%11.24%
71
Outperform
¥1.72T22.3411.02%1.39%15.11%142.87%
69
Neutral
¥85.60B8.769.64%3.51%-6.82%-40.90%
57
Neutral
¥409.41B709.43-0.47%3.74%-4.25%-110.18%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
JP:7012
Kawasaki Heavy Industries
10,095.00
5,223.91
107.24%
JP:6104
Shibaura Machine Co., Ltd.
3,895.00
324.00
9.07%
JP:5631
Japan Steel Works
9,633.00
5,276.05
121.09%
JP:7013
IHI
16,740.00
11,097.28
196.67%
JP:6361
Ebara
3,238.00
1,323.98
69.17%
JP:6302
Sumitomo Heavy Industries
3,342.00
95.74
2.95%

Kawasaki Heavy Industries Corporate Events

Kawasaki Heavy Industries Reports Strong Q1 FY2025 Performance
Aug 6, 2025

Kawasaki Heavy Industries reported a business profit of 20.5 billion yen for the first quarter of FY2025, marking a 3.5 billion yen increase year-over-year. Despite the minimal impact of U.S. tariff policies, the company maintains its full-year profit forecast at 145.0 billion yen, adjusting its assumed exchange rate to 145 yen per US dollar for the remainder of the fiscal year.

The most recent analyst rating on (JP:7012) stock is a Buy with a Yen12800.00 price target. To see the full list of analyst forecasts on Kawasaki Heavy Industries stock, see the JP:7012 Stock Forecast page.

Kawasaki Heavy Industries Reports Q2 2025 Financial Results
Aug 6, 2025

Kawasaki Heavy Industries reported its consolidated financial results for the three months ending June 30, 2025, showing a 10% increase in revenue compared to the same period in 2024. Despite the revenue growth, the company experienced a significant decline in profit attributable to owners of the parent, indicating potential challenges in maintaining profitability amidst market conditions.

The most recent analyst rating on (JP:7012) stock is a Buy with a Yen12800.00 price target. To see the full list of analyst forecasts on Kawasaki Heavy Industries stock, see the JP:7012 Stock Forecast page.

Kawasaki Heavy Industries Addresses Submarine Repair Misconduct
Jul 30, 2025

Kawasaki Heavy Industries has identified misconduct in its submarine repair business, prompting a special investigation by Japan’s Ministry of Defense and an internal committee. In response, the company has revised its repair contract processes, restructured its defense operations, and taken disciplinary actions against involved personnel to prevent future misconduct and restore trust.

The most recent analyst rating on (JP:7012) stock is a Buy with a Yen12800.00 price target. To see the full list of analyst forecasts on Kawasaki Heavy Industries stock, see the JP:7012 Stock Forecast page.

Kawasaki Heavy Industries Considers Investment Unit Reduction
Jun 11, 2025

Kawasaki Heavy Industries has announced its consideration of reducing its investment unit to enhance stock market vitality by expanding its investor base and improving stock liquidity. The company will evaluate this decision based on market trends, shareholder composition, and stock liquidity, aligning with Tokyo Stock Exchange regulations.

The most recent analyst rating on (JP:7012) stock is a Hold with a Yen6400.00 price target. To see the full list of analyst forecasts on Kawasaki Heavy Industries stock, see the JP:7012 Stock Forecast page.

Kawasaki Heavy Industries to Integrate Subsidiary Segments for Enhanced Efficiency
May 22, 2025

Kawasaki Heavy Industries has announced a strategic move to integrate the Facility Maintenance, Inspection, and Repair segment and the On-site Service segment of its subsidiary, Kawaju Support Co., Ltd., into its main operations at the Sakaide Works. This absorption-type split, effective October 1, 2025, aims to enhance productivity and efficiency through digital transformation, aligning with the company’s vision of a digital shipyard. The integration is expected to streamline operations and bolster the company’s competitive positioning in the shipbuilding industry.

The most recent analyst rating on (JP:7012) stock is a Hold with a Yen6400.00 price target. To see the full list of analyst forecasts on Kawasaki Heavy Industries stock, see the JP:7012 Stock Forecast page.

Kawasaki Heavy Industries and Furukawa Co. Discuss EarthTechnica Share Transfer
May 13, 2025

Kawasaki Heavy Industries and Furukawa Co., Ltd. have signed a Memorandum of Understanding to discuss the transfer of shares of EarthTechnica Co., Ltd., a subsidiary of Kawasaki engaged in crushing and grinding equipment. This move aims to enhance Furukawa’s technological capabilities and market reach, particularly in the environmental recycling sector, while leveraging EarthTechnica’s advanced technologies and reputation. The transaction is expected to create synergies, expand business domains, and strengthen operations in the global mining and quarry markets.

The most recent analyst rating on (JP:7012) stock is a Hold with a Yen6400.00 price target. To see the full list of analyst forecasts on Kawasaki Heavy Industries stock, see the JP:7012 Stock Forecast page.

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.Date of analysis: Aug 12, 2025