Japan Specialist

Mark Chadwick

Equity Bottom-Up

Mitsubishi Heavy Industries / Equity Bottom-Up

<ul>
<li>It is just 3 days 7 hours 52 minutes before the private jets start touching down at Sharm El-Sheikh International Airport for COP27</li>
<li>Expect a lot of jawboning on energy transition and decarbonization – music to the ears of MHI shareholders</li>
<li>MHI excels at Energy Transition as carbon intensive industries such as power generation and steelmaking shift to decarbonize</li>
</ul>


It is just 3 days 7 hours 52 minutes before the private jets start touching down at Sharm El-Sheikh International Airport for COP27
Expect a lot of jawboning on energy transition and decarbonization – music to the ears of MHI shareholders
MHI excels at Energy Transition as carbon intensive industries such as power generation and steelmaking shift to decarbonize


MHI (7011) | The Time to Act on Energy Transition

Thematic (Sector/Industry)

<ul>
<li>Inflation is impacting everything, from the price of pints to the cost of funerals</li>
<li>The BOJ wants more of it, but the weak yen is now officially a problem</li>
<li>What to do? If you believe we are in for a decade of inflation, then Buy Value - this week that means Japan Steel Works, MHI and Iwatani</li>
</ul>


Inflation is impacting everything, from the price of pints to the cost of funerals
The BOJ wants more of it, but the weak yen is now officially a problem
What to do? If you believe we are in for a decade of inflation, then Buy Value - this week that means Japan Steel Works, MHI and Iwatani


<ul>
<li>MHI has a roadmap for becoming carbon neutral by 2040.  The transition to a decarbonized society will be funded by green/transition bonds</li>
<li>MHI has issued its first green/transition bond amounting to 10 billion yen</li>
<li>We remain bullish on MHI and believe it is a key beneficiary of decarbonization trends in Japan</li>
</ul>


MHI has a roadmap for becoming carbon neutral by 2040.  The transition to a decarbonized society will be funded by green/transition bonds
MHI has issued its first green/transition bond amounting to 10 billion yen
We remain bullish on MHI and believe it is a key beneficiary of decarbonization trends in Japan


Mitsubishi Heavy Industries (7011) | Green Transition Bonds

<ul>
<li>The recent correction in the share price offers a good chance for long-term bulls to get into the stock</li>
<li>MHI is the core play on Japan's energy security given its portfolio of gas and nuclear power plant assets</li>
<li>The unseasonably HOT weather and potential power cuts, at the same time as soaring energy costs, could be the catalyst for the government to push for nuclear restarts</li>
</ul>


The recent correction in the share price offers a good chance for long-term bulls to get into the stock
MHI is the core play on Japan's energy security given its portfolio of gas and nuclear power plant assets
The unseasonably HOT weather and potential power cuts, at the same time as soaring energy costs, could be the catalyst for the government to push for nuclear restarts


Mitsubishi Heavy Industries (7011) | Three Reasons to BUY

<ul>
<li>MHI reported a strong 7% growth in the order backlog to ¥5,500 billion</li>
<li>MHI is a beneficiary of the global energy crisis, geared into gas turbine and nuclear supply chains</li>
<li>The stock is trading below book value (10 year average 1x) at a time when the core energy order book is as strong as ever</li>
</ul>


MHI reported a strong 7% growth in the order backlog to ¥5,500 billion
MHI is a beneficiary of the global energy crisis, geared into gas turbine and nuclear supply chains
The stock is trading below book value (10 year average 1x) at a time when the core energy order book is as strong as ever


Mitsubishi Heavy (7011 JP) | Just Getting (Re)Started

Japan

FANUC CORPORATION manufactures factory automation (FA) systems and equipments, and robots. The Company's products include computerized numerically-controlled (CNC) equipment, servo motors, laser systems, industrial robots, wire-cut electric discharge machines, and CNC drill.  Fanuc participates in a joint venture with General Electric in the FA field.

KOMATSU LTD. manufactures and sells construction and mining machinery, including excavators, bulldozers, and wheel loaders.  The Company, operating on a global scale, also produces forklift trucks and engineering equipment such as press system.

KUBOTA CORPORATION manufactures industrial machinery, farm machinery, and fluid piping systems.  The Company's products include ductile iron pipes, engines, tractors, combine harvesters, reaper binders, rice planters, and excavators.  Kubota also produces forged iron products, housing equipment, and environmental control plants.

SMC CORPORATION manufactures directional control devices such as power, hand, and air valves.  The Company also produces air filters, cylinders, and actuators along with other pneumatic equipment.  SMC seeks to become a comprehensive maker of automated equipment through the market demand of information and communications products.

KOMATSU LTD. manufactures and sells construction and mining machinery, including excavators, bulldozers, and wheel loaders. The Company, operating on a global scale, also produces forklift trucks and engineering equipment such as press system.

KUBOTA CORPORATION manufactures industrial machinery, farm machinery, and fluid piping systems. The Company's products include ductile iron pipes, engines, tractors, combine harvesters, reaper binders, rice planters, and excavators. Kubota also produces forged iron products, housing equipment, and environmental control plants.

EBARA CORPORATION manufactures pneumatic and hydraulic pumps and related equipment.  The Company's products include fuel, oil, water, and firefighting pumps, as well as steam turbines and boilers.  Ebara Corporation also engineers garbage incinerators, smoke desulfurizers, and other products related to environmental technology.

Minebea Mitsumi manufactures and markets miniature and instrument ball bearings.  The Company also makes DC motors, servo motors, stepping motors, spindle motors, pivot assemblies, rod-end and spherical bearings, fasteners, and computer keyboards. Minebea Mitsumi has production facilities in Thailand and Singapore.

Kawasaki Heavy Industries, Ltd. designs, develops, and manufactures transport equipment and industrial heavy machinery for military and commercial use.  The Company produces ships, railroad cars, aircraft engines and parts, hydraulic and gas turbines, submarine engines, boilers, and industrial robots.  Kawasaki Heavy Industries offers engineering and construction services to industrial plants.

DAIFUKU CO., LTD. designs, manufactures, and sells material handling equipment such as automated storage systems, conveyors, and automatic sorters.  The Company's products are used for automation in manufacturing and distribution businesses.

CRRC Corporation Limited manufactures rolling stock products. The Company produces locomotives, passenger carriages, freight wagons, vehicles key components, and other products. CRRC also provides vehicle repairing, investment management, and other services.

Stanley Black & Decker Inc. is a diversified global provider of hand tools, power tools and related accessories, mechanical access and electronic security solutions, healthcare solutions, engineered fastening systems, and more.

Graco Inc. supplies technology for the management of fluids in both industrial and commercial applications.  The Company designs, manufactures, and markets systems to move, measure, control, dispense, and apply fluid materials.  Graco's products are used for applying paints and coatings, high-pressure cleaning of equipment, and lubricating and maintaining vehicles and other equipment.

China CSSC Holdings Ltd. offers shipbuilding, ship components, ship repairing and diesel engines manufacturing. The Company distributes its products within the domestic market and to overseas markets.

Nordson Corporation designs, manufactures, and markets systems that apply adhesives, sealants, and coatings to consumer and industrial products during manufacturing operations.  The Company's products include customized electronic controls for the precise application and curing of materials to meet customers' requirements.  Nordson operates around the world.

China Shipbuilding Industry Company Limited designs, manufactures, sells and leases ship parts.  The Company's products include engines and parts, auxiliay engines and transportation equipment.

Parker-Hannifin Corporation manufactures motion control products, including fluid power systems, electromechanical controls, and related components.  The Company also produces fluid purification, fluid flow, process instrumentation, air conditioning, refrigeration, and electromagnetic shielding and thermal management products.

Cummins India Limited manufactures internal combustion engines, including diesel, reciprocating piston, gas turbine and gasoline engines. The Company also manufactures generating sets and public transport-type passenger motor vehicles, including luxury coaches and air-field buses.  In addition, Cummins India Ltd. operates a computerized and fully-equipped research and development facility.

IDEX Corporation designs, manufactures, and markets a variety of pump products, dispensing equipment, and other engineered products.  The Company's products include industrial pumps, lubrication systems, banding and clamping devices, and rescue tools.  IDEX markets its products to customers in the United States and overseas.

Xylem, Inc. is a designer, manufacturer, equipment and service provider for water and wastewater applications addressing the full-cycle of water from collection, distribution, and use to the return of water to the environment. The Company's products include water and wastewater pumps, treatment and testing equipment, industrial pumps, valves, heat exchangers, and dispensing equipment.

Mitsubishi Heavy Industries, Ltd. is a comprehensive heavy machinery maker. The Company manufactures machinery, ships, turbines and engines, prime movers, aircrafts, and machine parts for military and commercial use.  Mitsubishi Heavy Industries also researches and develops nuclear power plants.

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Mitsubishi Heavy Industries (7011 JP)

MHI (7011) | The Time to Act on Energy Transition

MHI is a key beneficiary of Energy Transition and Decarbonization. The upcoming COP27 will be a catalyst. MHI is already seeing a strong order book...

Mark Chadwick

Japan Weekly | Inflation Is the Story

If you believe we are in for a decade of inflation, then Buy Value - this week that means Japan Steel Works, MHI and Iwatani

Mark Chadwick

Mitsubishi Heavy Industries (7011) | Green Transition Bonds

We remain bullish on MHI and believe it is a key beneficiary of decarbonization trends in Japan. The issuance of green / transition bonds will fund...

Mark Chadwick

Mitsubishi Heavy Industries (7011) | Three Reasons to BUY

Nuclear restart discussions will inevitably gather steam during the summer as power shortages and potential blackouts take the spotlight. MHI is...

Mark Chadwick

Mitsubishi Heavy (7011 JP) | Just Getting (Re)Started

MHI is a beneficiary of the global energy crisis, geared into gas turbine and nuclear supply chains. The stock is trading below its 10-year...

Mark Chadwick

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