Kyushu Railway Co

9142: XTKS (JPN)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	¥‎7,794.00	Gbkr	Jngshdfz

Kyushu Railway Earnings: Strong Recovery in Traveling Meets Expectations; Valuation Unchanged

Adrian Atkins

Feb 13, 2024

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.

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