9142 JP

Kyushu Railway Company

Industrial/Transportation, Event Driven/Special Sit


Presented:05/02/2019
Price:¥3,645.00
Cap:$4.87B
Current Price:¥4,162.00
Cap:$5.46B

Presented

Date05/02/2019
Price¥3,645.00
Market Cap$4.87B
Ent Value$5.31B
P/E Ratio11.6x
Book Value¥2,529.76
Div Yield2.29%
Shares O/S160.00M
Ave Daily Vol558,188
Short IntN/A

Current

Price¥4,162.00
Market Cap$5.46B
Kyushu Railway Co. engages in the provision of transportation services with its commuter railway systems. It operates through the following segments: Transportation, Construction, Station Building and Real Estate, Distribution and Restaurant, and Others. The Transportation segment covers the railway business, bus operations, ship business and rental cars. The Construction segment handles vehicle mechanical equipment and electrical works. The Station Building and Real Estate segment includes real estate leasing and sales. The Distribution and Restaurant segment manages retail business, catering, and agriculture businesses. The Others segment includes hotel business. The company was founded on April 1, 1987 and is headquartered in Fukuoka, Japan.

Publicly traded companies mentioned herein: CBRE Group Inc (CBRE), Fukuoka REIT Corp (8968 JP), Kyushu Railway Co (9142 JP)

Highlights

The presenter is long shares of Kyushu Railway Co, also known as JR Kyushu, the operator of rail services in Kyushu, Japan and the owner of a real estate portfolio in the city. The stock has shares appreciated ~20% since going public in Q4’16, but he believes that multiple aspects of the business, including its business mix and balance sheet, are underappreciated by sell-side analysts. This, along with relatively inexperienced but presumably improving investor relations, leads the presenter to view the current ~¥3600 as attractive from a risk/reward perspective. He sees ~10% downside and 85% – 100% upside on the back of real estate portfolio growth, capital restructuring, improved investor relations, and restated trading multiples that are more in-line with JR Kyushu’s true peers.

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Idea Discussion

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