Disciplined Growth in Gas Turbines and Deepening of ITO

Goldman Sachs reiterates a Buy rating for Mitsubishi Heavy Industries following a CEO meeting that confirmed disciplined growth in its gas turbine business through productivity improvements. The company's focus on the Innovative Total Optimization (ITO) initiative is expected to support significant profit growth without excessive fixed cost increases.

Key Takeaways

• 1.MHI plans to double gas turbine production compared to FY3/25 levels by improving productivity rather than large capital investments, minimizing fixed cost risks.
• 2.The Innovative Total Optimization (ITO) initiative is targeting approximately ¥100 billion in benefits for FY3/27 through group-wide efficiency improvements.
• 3.Global gas turbine demand remains robust at roughly 96 GW in 2025, with MHI focusing on high-margin, large advanced-class turbines where it maintains a leading market share.

Table of Contents

• Gas turbines: Demand is solid; high probability of medium- to long-term profit realization
• Demand trends
• Competitive environment
• Production capacity and profit growth
• ITO results: Production response capability through group-wide optimization
• Our view
• Price Target Risks and Methodology - Mitsubishi Heavy Industries (7011.T)
• Disclosure Appendix

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