Mitsubishi Heavy Industries Should See Midterm Sales and Margins Rise on GTCC Growth

Mitsubishi Heavy Industries is a diversified industrial group with leading positions in gas turbines, defense systems, aerospace, and infrastructure. Historically, returns on invested capital and margins lagged peers such as GE Vernova and Siemens Energy, reflecting weak thermal power demand in the 2010s and poor capital allocation, including losses from regional jet and other noncore projects. We think these headwinds have largely abated as management has exited loss-making programs and refocused on higher-return businesses.