In today’s briefing:
- MUFG (8306) – Biggest JPN Bank, Lowest LDR at 48%: Most Bonds | ROE Surge to 12% May Be Sustainable
- IHI (7013) | Brace for a ¥130b Charge
- US Judge Rules Favorably for Okada Manila Dispute with Former Spac Partner
- Recruit Holdings: Weakening Job Markets and New Pricing Model to Impact HR Tech Further
MUFG (8306) – Biggest JPN Bank, Lowest LDR at 48%: Most Bonds | ROE Surge to 12% May Be Sustainable
- The biggest Japan banks by assets, in spotlight as near ending of negative interest rates, with lowest LDR, so highest bonds, cash, can see major benefit from YCC relief
- Years of low ROE at 5-7% seem behind MUFG now with 12-17% in past two quarters, where leverage is not out of control, with cost improvements key
- Loss loans down 29% over past two years, can support low credit costs, which dropped sharply from 81bps to 15bps from 3Q23 to 1Q24, possibly moving to reversals
IHI (7013) | Brace for a ¥130b Charge
- IHI’s share price has declined 16% on news that Pratt & Whitney would need to ground more planes due to problems with its PW1100 turbofan engines
- IHI has a 15% share of the revenue and risk from this program. The new engine was expected to be a major earnings driver over the next several years
- We believe that IHI will be forced to revise down OP guidance to a loss. The bigger impact could be on FCF and future capex plans.
US Judge Rules Favorably for Okada Manila Dispute with Former Spac Partner
- Japan’s Universal Entertainment’s Okada Manila casino unit removes another obstacle to its long quest to transform into a NASDAQ traded IPO.
- Judge rules that Okada is free of any obligations to US Space 26 Capital Partners.
- UE’s goal to take the casino public, despite expectations that the Spac will appeal, is likely to move forward toward identifying a new partner.
Recruit Holdings: Weakening Job Markets and New Pricing Model to Impact HR Tech Further
- The job openings in the US declined to 8.827m in July 2023, marking the lowest since March 2021, and falling well below projected 9.465m job openings for the month.
- On the other hand, web traffic on Recruit Holdings (6098 JP) ’s job platform Indeed has declined in July compared to June 2023 while it has improved slightly on Glassdoor.
- HR Tech segment’s top line growth declined 9.1% YoY in 1QFY03/2024 and the company has shifted into a new pricing model which we think would further impact segment’s growth.
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