West Japan Railway Co

9021: XTKS (JPN)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	¥‎8,796.00	Dzjjp	Yyvlrmz

JR West Earnings: Operating Leverage Drives Strong Recovery

Adrian Atkins

May 7, 2024

No-moat-rated JR West’s recovery was stronger than expected, with operating income in the year to March 31, 2024 (fiscal 2024) doubling to JPY 180 billion, ahead of prior guidance and our forecast of JPY 160 billion. On the back of the strong recovery, management upgraded its fiscal 2028 operating income target by 5% to JPY 195 billion. We upgrade our forecasts by a similar amount and lift our fair value estimate 8% to JPY 2,800 per share. We consider the stock slightly overvalued at current prices. It offers a forward dividend yield of 2.3%, though with limited upside to earnings over the long term due to population decline.

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