Mitsui’s Fiscal 2019 Earnings Trail Expectations Due to One-Off Event; Shares Remain Overvalued

We continue to see no-moat Mitsui as overvalued following the fiscal year ended March's net profit of JPY 414 billion, which was down 1% year over year. Stripping out a one-off loss of JPY 20.6 billion due to the fire at Intercontinental Terminals Company in March, results were largely within our expectations. Earnings from its metal resources segment were down 35%, but this was due to the absence of a valuation gain that had lifted fiscal 2018 earnings. Mitsui otherwise got a boost from the energy business on higher oil prices and the lifestyle division on the reversal of provisions for multigrain and contributions from its new fashion and textile businesses. After adjusting our commodity price assumptions and fine-tuning our earnings forecasts, our fair value estimate is unchanged at JPY 1,530.