Mitsubishi HC continues streak of record-breaking profits in FY 25

Mitsubishi released its FY 25 results on May 15, 2025, with revenue up 7.2% y/y at JPY2090.8bn, driven by increased transaction volumes mainly in the logistics, aviation, and real estate segments. Operating income increased 28% to JPY187.1bn, with margins expanding by 146bp to 8.9%. Net profit rose by 9.1% to JPY135.2bn; while achieving the initial plan, also set a new record for net income for the third consecutive term.

Mitsubishi HC Capital Inc., established in 1971 and headquartered in Tokyo, Japan, is a Japanese company primarily focuses on financial services, including finance leases and installment sales of machinery, equipment, and fixtures, as well as providing monetary loans and related financial services. In addition, it offers operating leases for machinery and transportation equipment, engages in investment and loan activities related to real estate, manages securities, provides financial services for aircraft and ships, and leases office buildings. The company has over 8,400 employees.

The company operates across six main segments. In FY 25, Customer Solutions was the largest revenue contributor, accounting for 53% of total sales. The Global Business segment followed with 22%, while Environment & Energy contributed 3%. Aviation generated 11% of sales, Logistics accounted for 6%, and Real Estate made up 5% of revenue.

Guidance signals continued success

Net income is projected to reach JPY160bn, meeting the 2025 MTMP target. This growth is driven by higher income gains in the Customer Solutions and Logistics segments, increased asset-related gains in the Real Estate and Environment & Energy segments, and reduced credit costs recorded in FY 25 in the Global Business and Environment & Energy segments. In addition, the ROE is anticipated to rise to 8.8%, up from 7.8% in FY 25.

Progressive dividend policy

The company has a progressive dividend policy and in the 2025 mid-term management plan maintained a dividend payout of approximately 40%. Mitsubishi declared annual dividends of JPY40 per share in FY 25, reflecting a yield of 4%. Moreover, management plans to set the payout at 40% for FY 26, supported by robust performance in FY 25. Therefore, based on FY 25 forecasts, the dividend would be JPY45 per share, reflecting a yield of 4.2%.

Strong operating income growth

Mitsubishi has posted modest revenue CAGR of 5.8% over FY 22-25, reaching JPY2,091bn. Operating income outpaced revenue growth significantly, with a CAGR of 17.9% over the same period, reaching JPY187bn in FY 25, along with a robust increase in margins expanding by 249bp to 8.9%. Net income therefore rose a CAGR of 10.7% to JPY135bn in FY 25.

In comparison, eGuarantee, Inc., the company’s local peer, outperformed, with a revenue CAGR of 9% over FY 22-25, reaching JPY10.2bn in FY 25. Operating income grew at a CAGR of 11% to JPY5.1bn. Net income therefore posted a CAGR of 12.4%, reaching JPY3.5bn.

Analysts show positive sentiment

Over the past year, the company's stock has delivered modest returns of approximately 2.2%. In comparison, eGuarantee’s stock has delivered higher returns of about 12.5% over the same period. Mitsubishi is currently trading at a P/E of 9.3x, which is lower than its 3-year historical average of 10.5x and eGuarantee’s valuation of 24x.

Mitsubishi is pretty much liked by two analysts, with one of them having ‘Buy’ rating and one having ‘Hold’ rating, with an average target price of JPY1,235, implying 15.8% upside potential from its current price. Their views are backed by an anticipated revenue CAGR of 2.8% over FY 25-27, reaching JPY2,211.3bn. In addition, analysts expect EBIT CAGR of 12.9% to JPY238.6bn, with margins expanding by 184bp to 10.8% in FY 27. Likewise, analysts estimate an EBIT CAGR of 13.7% and a net profit CAGR of 12.8% for eGuarantee.

Overall, the company achieved record net profit growth in FY 25, driven by strong performance in the logistics, aviation, and real estate segments. Analysts are optimistic, projecting further growth in net income and ROE for FY 26, supported by a progressive dividend policy. Despite modest stock returns compared to its peer eGuarantee, Mitsubishi's lower P/E multiple and positive analyst ratings indicate potential upside.

However, the group faces several risks, including credit risk from medium to long-term financial products, asset risk due to market value fluctuations of aircraft and real estate, and country risk from global operations. In addition, operational risks related to business processes, technology, and compliance, as well as environmental and compliance risks, are managed to ensure stability and compliance with regulations.