Mitsubishi is reaching its peak thanks to a share buyback program; liquidity is at the center of concern

Mitsubishi, Japan’s largest conglomerate, said on Tuesday it would buy back up to 10 percent of its shares, which, combined with early returns and annual dividends, would bring total shareholder returns to 94% for the year ending in March.

Its shares hit a record 2,812.5 yen on Wednesday, up 11% from Tuesday’s close and outperforming the Nikkei index, which was down 0.20% at 0523 GMT.

Mitsubishi was the second best performing stock in the index after GS Yuasa Corp which rose almost 20%.

Mitsubishi still has 500 billion yen in excess cash that it can return to shareholders by the end of March 2025, Jefferies analysts said in a note.

“If the company does not find attractive acquisition targets, we believe management will return additional cash to shareholders,” the Jefferies note said.

The company posted a record net profit last year after raw material prices rose following the invasion of Ukraine and Russia.

Mitsubishi Chief Executive Katsuya Nakanishi did not elaborate on possible acquisition targets during Tuesday’s conference call, but said the United States was a promising market for investment because it is self-sufficient in energy and food.

“We will have to wait for the results of the US election, but I think the US will remain a strong investment market,” Nakanishi said.

“I would also like us to spend our money in areas where we can promote EX (energy transition) and DX (digital transition) in an integrated way.”

Japan is the largest foreign investor in the United States, but Donald Trump’s promise to block Nippon Steel’s proposal to buy US Steel if he takes the White House could encourage Japanese companies to be more careful when evaluating deals, according to analysts, lawyers and executives. .

($1 = 147.9100 yen)