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Mitsubishi UFJ Financial Group (MTU) provided some positive guidance for its first-half results (it doesn't report earnings until late November) that could move its stock, saying operating profit and net income will be better than previously forecasted.

Mitsubishi UFJ increased its H1 (6-month period ended Sept. 30, 2006) consolidated earnings forecast as follows:

  • Ordinary income: +7.7% to 2,770 billion yen
  • Ordinary profit: +4.7% to 660 billion yen
  • Net income: +52.9% to 520 billion yen

It explained its reason for upward revising net income as follows:

The increase in consolidated net income is expected to be greater than that of ordinary profit, mainly due to the increase in reversal of allowance for loan losses and gains on loans written-off, which were accounted for as extraordinary gains.

Mitsubishi UFJ said it will announce earnings forecasts for the fiscal year (ending March 2007) when it reports its H1 results in November.

Mitsubishi UFJ has been a tough stock to hold of late despite all its promise. In about a month period between early-May to June, its shares went from a multi-year high, to a 52-week low. Since then, they've rebounded at times by as much as about 15%, but have once again fallen to near 52-week low levels. Of course the promise still exists, but if you missed the run-up over the three year period to this spring, then you have to figure you'll need some patience as the Bank of Japan does its thing and the lending environment improves.

Its ordinary shares (Tokyo: 8306) lost 0.68% today, to close at 1.47 million yen (ADR equivalent of $12.51 at Y117.5/US$1). Its ADRs closed yesterday at $12.64, and are down 0.25% at $12.60 in intra-day morning trading.


Mitsubishi UFJ Financial Group (MTU) 1-year chart:

Mitsubishi-UFJ-1yr-chart-103006

Disclosure: The author does not own shares of Mitsubishi UFJ.

Source: Mitsubishi UFJ Ups H1 Guidance