Railways - Japan: 1Q Preview: largely muted but 2Q to set the tone for 2H earnings expectations

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Railways - Japan: 1Q Preview: largely muted but 2Q to set the tone for 2H earnings expectations

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Railways - Japan

1Q Preview: largely muted but 2Q to set

the tone for 2H earnings expectations

Price Objective Change

Shifting peak season – uncertainties remain into 2Q 23 July 2026

We expect 1Q results to be largely muted for Japanese railway companies, with Equity

performance seems to be broadly tracking company plans. We believe 2Q will be the key Japan

quarter for the sector, as some companies face a tough comparison against last year's Railways

World Expo-related demand boost, while another hot summer could shift domestic Hiro Nakakura, CFA >>

leisure travel demand from the summer holiday period into the Silver Week holiday (19- Research Analyst

23 September). We also remain cautious on inbound tourism trends, which have been Merrill+65 6678Lynch0972(Singapore)

somewhat weaker than expected in recent months. Given these uncertainties, we do not hiro.nakakura@bofa.com

expect any major announcements at 1Q results, including changes to FY guidance or Nathan Gee, CFA >>

Research Analyst

additional shareholder return measures. We make only modest revisions to our forecasts, Merrill Lynch (Singapore)

maintain our ratings across the sector, and lower our Seibu PO to ¥4,200 from ¥5,000. nathan.gee@bofa.com

Amy Han >>

Top picks: Companies with greater earnings visibility ResearchMerrill LynchAnalyst(Hong Kong)

Heading into 1Q results, we prefer companies with higher visibility on near-term amy.han@bofa.com

earnings. While business trends have remained resilient despite the loss of Expo-related Hazel Xue >>

demand, hot weather, and softer inbound volumes, uncertainty is likely to increase into BofAS Japan

2Q.