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Mitsubishi UFJ Financial Group Inc ADR MUFG

Morningstar Rating
$9.96 +0.14 (1.43%)
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Company Report

Mitsubishi UFJ Earnings: Currency and Higher NIM Lift Profit, but Shares Still Fairly Valued

We lift our fair value estimate on Mitsubishi UFJ Financial Group, or MUFG, to JPY 1,315 from JPY 1,270 following December-quarter results. However, our ADR fair value estimate is unchanged at $9, given the weaker JPY versus USD since our last update. We lift financial year March 2024 net profit by 16.6% to JPY 1,568 billion, mainly due to a favorable adjustment to our currency exchange rate and net interest margin, or NIM. We raise our NIM for financial years March 2024 and March 2025 each by 8 basis points to 0.85% and 0.87%, respectively. We assume NIM continues to improve, with return on equity, or ROE, rising to average 8.4% for the next five years, above its prepandemic long-term average of 6.7%. We think there should be some positives that will support MUFG's share price performance, but we would prefer to wait for a more attractive entry point.

Price vs Fair Value

MUFG is trading within a range we consider fairly valued.
Price
$9.83
Fair Value
$3.00
Uncertainty
Medium
1-Star Price
$63.78
5-Star Price
$8.40
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

MUFG's status as Japan's largest bank stock makes it a recipient of favor for overseas investors who expect interest rates in Japan to rise.

Bears

MUFG’s ROE is lower than that of most large global banks, reflecting its exposure to the tough Japanese market and its conservative approach that sometimes prioritizes prudence over aggressive pursuit of returns.

Is it the right time to buy, sell, or hold?
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News

Trading Information

Previous Close Price
$9.82
Day Range
$9.9210.02
52-Week Range
$6.0010.02
Bid/Ask
$9.96 / $9.97
Market Cap
$118.04 Bil
Volume/Avg
814,416 / 3.2 Mil

Key Statistics

Price/Earnings (Normalized)
10.51
Price/Sales
2.83
Dividend Yield (Trailing)
2.54%
Dividend Yield (Forward)
2.54%
Total Yield
5.38%

Company Profile

Mitsubishi UFJ Financial Group is the largest bank in Japan in terms of market capitalization and assets, with an 8.1% share of all domestic loans as of March 2023. It is the largest non-Chinese bank group globally and has a balance sheet slightly larger than those of JPMorgan Chase and HSBC Holdings. MUFG’s operations in Japan account for around half of profit, banking in Thailand and Indonesia for around 15%, and equity-method earnings from Morgan Stanley most of the rest.
Sector
Financial Services
Industry
Banks - Diversified
Stock Style Box
Large Core
Total Number of Employees
149,700

Competitors

Valuation

Metric
MUFG
HSBC
MFG
Price/Earnings (Normalized)
10.512.7714.72
Price/Book Value
0.840.830.66
Price/Sales
2.832.222.24
Price/Cash Flow
6.594.63
Price/Earnings
MUFG
HSBC
MFG

Financial Strength

Metric
MUFG
HSBC
MFG
Quick Ratio
Current Ratio
Interest Coverage
Quick Ratio
No chart available

Profitability

Metric
MUFG
HSBC
MFG
Return on Assets (Normalized)
0.43%0.79%0.34%
Return on Equity (Normalized)
9.33%12.91%9.59%
Return on Invested Capital (Normalized)
Return on Assets
MUFG
HSBC
MFG
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Economic Moat
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RY
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TD
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C
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