Mitsubishi Achieves Record High with Share Buyback Proposal; Attention Shifts to Cash Reserves

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Mitsubishi Corp’s shares reached a historic peak on Wednesday, following the announcement by the Japanese trading giant to allocate 500 billion yen ($3.4 billion) for share buybacks. Japan’s leading trading house, Mitsubishi, declared on Tuesday its intention to repurchase up to 10 percent of its shares. This move, coupled with a previous buyback and an annual dividend, is expected to result in a total shareholder return of 94 percent for the fiscal year ending in March.

On Wednesday, its shares soared to a new pinnacle of 2,812.5 yen, marking an 11 percent surge from Tuesday’s closing price. This performance eclipsed the Nikkei index, which dipped by 0.20 percent at 0523 GMT. Mitsubishi emerged as the second-best performer on the index, trailing only GS Yuasa Corp, which surged nearly 20 percent. According to analysts at Jefferies, Mitsubishi possesses an additional 500 billion yen in surplus cash that it could potentially distribute to shareholders by the end of March 2025.

According to the Jefferies note, “Should the company fail to identify appealing acquisition opportunities, management is likely to distribute the surplus cash to shareholders.” Mitsubishi achieved a record-high net profit last year following a surge in commodity prices triggered by Russia’s invasion of Ukraine. However, Mitsubishi Chief Executive Katsuya Nakanishi refrained from divulging specifics regarding potential acquisition targets during Tuesday’s briefing. Nonetheless, he highlighted the United States as a promising market for investment, citing its high energy and food self-sufficiency.

Nakanishi expressed, “We’ll need to monitor the outcomes of the U.S. election, but I anticipate the U.S. will continue to be a robust investment destination.” He further remarked, “I envision us utilizing our funds to advance EX (energy transformation) and DX (digital transformation) in a cohesive manner within conducive areas.”

Analysts, lawyers, and executives suggest that Japan, as the largest foreign investor in the United States, may exercise greater caution in assessing deals if Donald Trump fulfills his promise to obstruct Nippon Steel’s intended acquisition of U.S. Steel upon potentially reclaiming the White House.

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