Morningstar - East Japan Railway Company (9020) Cutting JR Eastâ€™s FVE to JPY 9200 on Medium-Term Margin Pressure; Cautious on Rising OPEX

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Morningstar

Lorraine Tan

EUR 100.00 For Business Accounts Only

Cutting JR Eastâ€™s FVE to JPY 9200 on Medium-Term Margin Pressure; Cautious on Rising OPEX

We reduce our fair value estimate for JR East to JPY 9200 from JPY 9500, driven by a less positive outlook on the profitability of the transportation business in the medium term. While the company posted solid top-line growth of 3.2% year over year in the fiscal third quarter (for the fiscal year ending March 2019), operating margin fell slightly to 19.4% from 19.6% a year ago. JR East has seen margins grow over the past five years, but we think this trend is reversing. We see cost pressure in t...

31/01/2019 13 EN

Underlying

East Japan Railway Company

East Japan Railway is mainly engaged in the transportation business. Co. operates railway routes covering mainly in the Kanto area and the Tohoku area totaling of 7,457.3 km of railway with 1,665 stations, 11,506 standard rolling stocks and 1,370 bullet Train rolling stocks as of Mar 31 2017. Co. establishes commercial space in the railway stations and operates restaurants, retail stores, cafes, convenience stores and shopping centers; and leases office buildings located in the railway stations and surrounding areas. Co. is also engaged in hotel business, advertising agency, travel operations, wholesale, truck delivery, information processing, cleaning, as well as credit card business.

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JP3783600004 Japan

Provider

Morningstar

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.

Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.

We have operations in 27 countries.

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Analysts

Lorraine Tan

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Cutting JR Eastâ€™s FVE to JPY 9200 on Medium-Term Margin Pressure; Cautious on Rising OPEX

PSA Market Strategy: Japan Perspective for 2023

PSA Market Strategy: The Japan Perspective 2022

With a more favourable environment, EAST JAPAN RAILWAY improves to Positive

Business as Usual for No-Moat Lonza; Specialty Ingredients Carve-Out on Track for 2020

Sasol Provides Full-Year Production Update

Sasol Provides Full-Year Production Update

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