Mitsubishi Heavy Industries, Ltd.
7011.THIGHCore · Weight: 20%· Data as of 2026-05-24
Investment Thesis
Japan's #1 defense contractor — prime on GCAP 6th-gen fighter, Type 12 missile mass production, Taigei submarines, Mogami frigates. FY2025 full-year results (announced May 12, 2026): Revenue ¥4,974.1B (+14.1%), NI ¥332.1B (+35.3%) — all records. ADS segment hit ¥1,144.5B (>¥1T milestone confirmed, +38% YoY). Order intake ¥7,653.6B (+20%). Australia Mogami contract formally signed April 18, 2026 (A$10B, 3 frigates — Japan's largest ever defense export). Arms export liberalization enacted April 21, 2026 — first Philippines destroyer sale framework agreed May 7. FY2026 guidance: Revenue ¥5.4T, Business Profit ¥540B (+25%). Stock fell -7.07% on earnings day (sell-the-news) despite record results — current ¥4,080 vs analyst PT ¥5,348-5,507.
Risk
1) PE 40.1x still reflects defense premium — compression risk if geopolitical tensions ease or defense budget growth slows. 2) NEW: China export controls — 5 MHI subsidiaries on China's dual-use export control list (Feb 24, 2026). Input procurement risk for rare earths, tungsten. Controls still in force. 3) GCAP is a decade-long program with execution risk across 3 countries. 4) D/E 21% (interest-bearing basis; 165% on total liabilities) — the difference reflects financial debt only vs. gross balance sheet. 5) Defense ADS (23% of revenue) vs Energy Systems (42%) — still a conglomerate, not a pure defense play. 6) FCF declined ¥585B → ¥300B — prior figure likely included advance payments from Mogami contracts.
Monitoring Trigger
✓ ADS ¥1T: CONFIRMED (¥1,144.5B). ✓ Australia Mogami contract: SIGNED April 18, 2026. ✓ Arms export enacted. NEW: Watch first named arms export contract under new rules (Q2-Q3 2026). Watch China sanctions resolution — if escalated, review supply chain for rare earth/tungsten exposure. If forward PE drops below 30x on earnings growth, ADD. Dividend ¥29/share guided FY2026 (+16% YoY).
Key Dates
Update History
NEW ADDITION. Japan's #1 defense contractor. ADS segment +25% YoY. Australia Mogami export ($7B). GCAP prime. Type 12 missile mass production. PE 51.3x reflects defense premium.
FY2025 full-year (May 12 2026): Revenue ¥4,974.1B (+14.1%), NI ¥332.1B (+35.3%), ADS ¥1,144.5B (>¥1T CONFIRMED). Australia Mogami SIGNED April 18 (A$10B). Arms export liberalization enacted. Philippines destroyer sale May 7. China: 5 MHI subsidiaries on dual-use control list — NEW RISK. PE compressed 51.3x→40.1x as earnings grew. Stock -7% on earnings day. Analyst consensus BUY, PT ¥5,348-5,507.
Key Metrics
Business Segments
| Segment | Revenue | Share | Description |
|---|---|---|---|
| Energy Systems | ¥871B (1H) | 41% | Gas turbines (GTCC), nuclear power — largest segment |
| Aircraft, Defense & Space | ¥1,144.5B (FY2025 full year) | 23% | GCAP fighter, Type 12 missiles, Mogami frigates, Taigei submarines, space launch. FY2026 guidance ¥1,250B. |
| Plants & Infrastructure | ¥415.9B (1H) | 20% | Chemical plants, transportation, environmental systems |
| Logistics, Thermal & Drive | ¥282.4B (1H) | 13% | Forklifts, turbochargers, engines |
Supply Chain Evidence
| Evidence | Customer | Product | Detail |
|---|---|---|---|
| confirmed | JMSDF | Mogami-class frigates (12 ships completed Dec 2025) | Final FFM launched Dec 2025. ¥58.3B per ship contract.[source](2025-08) |
| confirmed | Royal Australian Navy | Improved Mogami frigates (initial 3 ships, SEA 3000 Phase 1) | FORMAL CONTRACT SIGNED April 18, 2026 — A$10B for 3 GPF (General Purpose Frigates). Japan's largest-ever defense export. Up to 11 ships in full program at A$20B. First ship delivery 2029. MHI Nagasaki yard. Source: MHI press release mhi.com/news/260418.html + Australian MoD.[source](2026-04) |
| confirmed | Philippine Navy (framework) | Used JMSDF destroyers (first arms sale under April 2026 rules) | Japan-Philippines framework agreed May 7, 2026 for transfer of used JMSDF destroyers — first lethal weapons sale under the April 21, 2026 Three Principles revision. MHI not named as direct contractor in this deal but opens Japan-Philippines naval cooperation precedent.[source](2026-05) |
| confirmed | JASDF / ATLA | Type 12 upgraded surface-to-ship missile | ¥25B mass production contract. Service entry FY2027.[source](2025-01) |
| confirmed | JMSDF | Submarine-launched cruise missile | ¥2.9B initial contract for torpedo tube-launched variant. Operational by 2028.[source](2025-08) |
| confirmed | GCAP JV (UK/Italy) | 6th-gen fighter aircraft (prime contractor Japan) | MHI is Japan's prime. IHI handles engine (XF9), Mitsubishi Electric handles electronics. First flight 2027, service 2035.[source](2026-04) |
| confirmed | JMSDF | Taigei-class submarines | MHI and KHI alternate submarine production. 5th Taigei commissioned March 2026.[source](2025-08) |
Sources & References
Peer Comparison
| Company | PE | Fwd PE | ROE | Op Margin | FCF |
|---|---|---|---|---|---|
| Mitsubishi Heavy Industries, Ltd. | 40.1 | 40.24 | 12.2% | 8.7% | +¥300B |
| ShinMaywa Industries, Ltd. | 16.5 | 18 | 8.18% | 4.5% | -¥11.0B |
| Tokyo Keiki | ~29.7 (actual FY2025 on ¥181 EPS; StockAnalysis shows 19.29x but uses stale FY2024 data) | 22.3 | ~7% (FY2025 actual; StockAnalysis 11.89% is stale FY2024) | ~4.6% (FY2025: OP ¥2.83B est. / Rev ¥61.5B) | N/A |
| ACSL Ltd. | N/A | N/A | -77.7% | -71% | -¥1.3B |
| The Japan Steel Works, Ltd. | 33.5 | 31.1 | 9.09% | 8.4% | -¥19.7B |
| SKY Perfect JSAT Holdings Inc. | 43.7 | 35 | 4.5% | 10% | +¥30B (est.) |
| Howa Machinery, Ltd. | 10.3 | 11 | 6.5% | 5.5% | +¥1B (est.) |