Kyushu Railway Co
Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
---|---|---|---|
¥3,557.00 | Vcnz | Pkcckvp |
Kyushu Railway Earnings: Strong Recovery in Traveling Meets Expectations; Valuation Unchanged
We maintain our fair value estimate for no-moat-rated Kyushu Railway at JPY 2,900 per share, following the release of third-quarter results. For the nine months ending Dec. 31, 2023, EBIT soared 92% to JPY 43 billion compared with the previous corresponding period, as demand recovered following the pandemic lockdowns. Management reaffirmed full-year guidance for EBIT to improve by 33%, implying a weak fourth quarter that management says is because of higher maintenance and operating costs. We leave our near-term forecasts unchanged, broadly in line with company guidance. The stock trades 15% above our fair value estimate, screening as overvalued.