Earnings expectations rising for both commercial and defense-related businesses; remain bullish on sector names

Goldman Sachs summarizes its overall view on Japan's shipbuilding industry, upcoming catalysts, business trends at select non-covered companies, and the implications for its coverage companies Namura Shipbuilding, Mitsui E&S, and Tokyo Keiki. The report notes that the order backlog is at a historically high level, with vessel demand already secured for delivery over the next few years. The order backlog for commercial vessels could grow further through capacity enhancements supported by subsidies from the shipbuilding industry revitalization fund, potentially triggering a rush in engine orders and unit price improvements. Domestic and international defense demand is expanding, and the US defense budget may allocate funds to procure naval vessels, benefiting related suppliers. Global supply/demand is tightening and new vessel prices remain at historically high levels. On estimates, it lowers Namura Shipbuilding's operating profit forecasts on higher steel prices and raises those for Mit