Mitsubishi Heavy (TSE:7011) Cuts Guidance as Political Shifts Stir Hopes for Defense Upside—Is Sentiment Misplaced?

• In late September 2025, Mitsubishi Heavy Industries revised its consolidated earnings guidance for the fiscal year ending March 2026, lowering its revenue, business profit, and net profit expectations primarily due to the privatization and reclassification of Mitsubishi Logisnext as discontinued operations and an expected ¥30 billion loss on business reorganization (after tax).
• Despite its earnings downgrade, the company's recent developments unfolded alongside heightened investor interest due to political changes in Japan, which fueled expectations of stronger government and defense spending.
• We'll examine how the lowered earnings guidance amid political optimism impacts Mitsubishi Heavy Industries' future investment narrative.

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Mitsubishi Heavy Industries Investment Narrative Recap

To believe in Mitsubishi Heavy Industries as a shareholder, you need confidence that its defense, energy, and infrastructure businesses will keep driving profit growth despite exposure to foreign exchange swings and lumpy defense orders. The latest earnings downgrade, tied mainly to the Logisnext reclassification and a one-off restructuring loss, does not appear to materially impact the most important near-term catalyst: increased government and defense spending amid Japan’s political shift. The biggest risk in the near term remains ongoing FX volatility given MHI’s global sales footprint.

Among recent developments, the company’s September 30 guidance revision stands out. This announcement reflected a JPY 30,000 million after-tax loss from spinning off Mitsubishi Logisnext and temporarily lower reported profit, both of which coincided with a surge in investor optimism as government policy winds shifted towards greater defense outlays, a factor likely to remain closely watched as new project orders are debated.

But while political optimism fuels expectations for defense order growth, investors should also be aware that ongoing exchange rate swings could ...

Read the full narrative on Mitsubishi Heavy Industries (it's free!)

Mitsubishi Heavy Industries is projected to achieve ¥6,460.1 billion in revenue and ¥438.4 billion in earnings by 2028. This outlook assumes an annual revenue growth rate of 8.1% and a ¥187 billion increase in earnings from the current ¥251.4 billion.

Uncover how Mitsubishi Heavy Industries' forecasts yield a ¥3995 fair value, a 5% downside to its current price.

Exploring Other Perspectives

Six fair value estimates from the Simply Wall St Community span from ¥2,113.87 to ¥3,995, reflecting wide differences in growth forecasts. With foreign exchange volatility still a key risk, you may find it valuable to examine the varied logic behind these community views on MHI.

Explore 6 other fair value estimates on Mitsubishi Heavy Industries - why the stock might be worth as much as ¥3995!

Build Your Own Mitsubishi Heavy Industries Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Mitsubishi Heavy Industries research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Mitsubishi Heavy Industries research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Mitsubishi Heavy Industries' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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