Central Japan Railway (9022): 1Q results: In line with expectations, but positive impression of currently firm trends and pricing scope

Research evidence excerpt

Central Japan Railway (9022): 1Q results: In line with expectations, but positive impression of currently firm trends and pricing scope

JPMorgan Securities Japan Co., Ltd. Asia Pacific Equity Research

Ryota Himeno AC 31 July 2026 J P M O R G A N

(81-3) 6736-8639

ryota.himeno@jpmorgan.com

Investment Thesis, Valuation and Risks

Central Japan Railway (9022) (Overweight; Price Target: ¥4,650)

Investment Thesis

With 1H FY2025 results, JR Central raised its Chuo Shinkansen maglev construction cost

outlook from ¥7.04 trillion to ¥11 trillion, and increased its May 2025-announced share

buyback from ¥100 billion to ¥110 billion (4.59% of total shares outstanding). Despite the

maglev investment burden, JR Central has indicated that it can continue to return profits to

shareholders, depending on upside to profit and cash flow guidance. Assuming a tentative

opening date of 2035 for the maglev line, JR Central needs to raise about ¥2.4 trillion

excluding annual operating cash flow, and plans to use corporate bonds and borrowings

(company’s interest rate assumption of 3%). Operating cash flow estimates assume

transportation revenue at ¥1.49 trillion from FY2026 (excluding impact of Osaka Expo

from FY2025 guidance). In other words, the YoY revenue growth will be the (partial) source

of funds for share buybacks. In the fiscal year after opening the Shinagawa–Nagoya section,

JR Central targets sales at ¥1.64 trillion, recurring profit at ¥65 billion, and the outstanding

balance of long-term debt at ¥7.1 trillion. It estimates sales will rise by ¥70 billion in the

fiscal year after the maglev-line launch, with a ¥700 increase in reserved seat fares for the

Tokaido Shinkansen Nozomi. If passenger volume is unchanged, each ¥1,000 fare hike for