Tobu Railway

Research evidence excerpt

Tobu Railway

Global Markets Research

19 June 2026Tobu Railway

9001.T 9001 JP / EQUITY: JAPAN TRANSPORTATION

RatingWe update our earnings forecasts Remains Neutral

Target price JPY 3,000 RemainsImproved shareholder returns, but low profit growth likely to persist

Closing price JPY 2,846.0We keep our Neutral rating, regard stock as fairly valued 18 June 2026

We maintain our Neutral rating on Tobu Railway. We update our forecasts in light of 26/3

Implied upside +5.4%results. We take a favorable view of the company's decision to change the shareholder

return policy in the 25/3–28/3 medium-term plan from a minimum payout ratio of 40% to a

target of 50%. On the other hand, profit growth is likely to remain sluggish in 27/3 due to

factors such as increased depreciation costs in the railway business. We think conditions

Relative performance chartwill remain tough for profit growth in the short term as ongoing inflation pushes up

personnel costs. We think it will remain difficult for the market to assign a higher valuation

to the stock. Given results broadly in line with our forecasts, we make only minor

adjustments to our earnings forecasts and maintain our ¥3,000 target price. Our target

price is based on a P/B of around 0.9x our 27/3 forecasts. This is because railway

companies' cost of capital is higher than before due to rising interest rates and entrenched

inflation, and we also expect the company's ROE to gradually fall.

We forecast 27/3 operating profits of ¥73.2bn, slightly above guidance

We forecast 27/3 operating profits of ¥73.2bn, slightly higher than guidance of ¥72.0bn, as

we expect railway revenues to exceed guidance. However, we expect rising depreciation

costs to result in a y-y decline in operating profit in the transportation segment, and while