MITSY - Mitsui & Co. Share Price Has Gotten Ahead Of Growth Delivery

2024-05-02 07:49:20 ET

Summary

• Mitsui & Co. is expecting a decline in profit for fiscal year 2025. Commodity volume production forecasts for this year are also lower.
• The company is continuing with its investments in non-resource businesses and also plans a share split and dividend raise.
• The recent runup in Mitsui share price seems to have gotten ahead of its growth plans and the stock is still valued in the middle of its peer group.
• While I was early to rate Mitsui a Hold, I am maintaining that rating due to valuation.

Another Trillion Yen Year, Mostly Because Of One-Offs

Mitsui & Co. (MITSY) (MITSF) was the first of the five major Japanese trading companies to report earnings for the fiscal year ending March 2024. The company surpassed the ¥950 billion profit forecast it issued last quarter, delivering ¥1063.7 billion, topping the trillion yen mark for the second year in a row. Unfortunately, this beat is not as strong as it seems because most of it came from two one-time items in the Energy segment totaling around ¥90 billion. The first is a reduction in the estimate of future asset retirement obligations, and the second is from realized foreign exchange translation adjustments in the LNG business....

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