Initiating Coverage of East Japan Rail With FVE of JPY 10,600 per Share, Trading at Larger Discount
We are initiating coverage of East Japan Railway Company, or JRE, with a fair value estimate of JPY 10,600. We assign JRE a narrow moat rating, owing to its positive returns that exceed its cost of capital and a high certainty of these stable returns as a result of the service territory monopoly. JRE benefits from an extensive rail network that continues to attract a large volume of passengers, with additional appeals emerging from new office property and retail facilities. Shares are trading at...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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