Marginal Impact from MHI's Acquisition of Bombardier's CRJ Business, FVE Raised By 2%

Mitsubishi Heavy Industry's, or MHI's, confirmed acquisition of Bombardier's commercial regional jet, or CRJ, business for USD 750 million affirms our prior expectation that the deal would have a relatively minor impact on MHI. CRJ is a mature business and we see little growth, adding only around JPY 3 billion operating profit to our midcycle forecast. The purchase, we think could, however, help add expertise and a distribution and support network to boost MHI's own regional jet program. As a result, we move forward our assumption for the recently rebranded SpaceJet sales to breakeven by one year to MHI's financial year ending March 2023 (fiscal 2022). This lifts our fair value estimate by 2% to JPY 4,820 and we continue to see MHI as being fully valued.