Transportation Sector: 2026 investment strategy: Try riding a horse; lean into logistics

Research evidence excerpt

Transportation Sector: 2026 investment strategy: Try riding a horse; lean into logistics

JR

East)

Rising interest rates: In addition to substantial interest-bearing debt and declining real estate valuations, it is difficult to expect railways to outperform within the subsector Central Japan Railway (9022;

West Japan Railway (9021; JR

amidst rising interest rates. JR Central)

West)

Upside: Upside lies in a rerating of real estate due to inflation, companies' demonstrating their defensive nature during a market pullback, increased buying by activist Kyushu Railway (9142; JR

Tobu Railway (9001)

investors, and a review of the railway fare system. The JR companies continue to press the government to switch to notification-only for shinkansen limited express fares for Kyushu)

Keisei Electric Railway (9009) Keikyu (9006)

Railways unreserved seats, introduce a pricing mechanism that responds promptly to inflation, and to revise the total cost calculation method itself, but we think these will take time even Tokyu (9005)

Seibu Holdings (9024) Tokyo Metro (9023)

if they materialize. Odakyu Electric Railway (9007)

Nishi-Nippon Railroad (9031;

JR: Among the JR companies, our relative preference is JR Central in the run-up to 1H results (expecting upside to FY2026 earnings, share buyback expectations). Looking Keio (9008)

Nishitetsu)

ahead to FY2027 and beyond, we highlight JR East (good earnings visibility for FY2027 onwards). Hankyu Hanshin (9042)

Kintetsu Group Holdings (9041),

Private railways: We highlight Tokyu and Hankyu Hanshin for real estate values, Odakyu for shareholder returns, and Keio as uncertainties surrounding the Shinjuku

NANKAI (9044)

redevelopment come to an end .

Keihan Holdings (9045)

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