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Research Report Shayne Heffernan Ph.D www.livetradingnews.com

Central Japan Railway has posted a strong turn around during 2012 and that is set to continue in 2013. Our price target remains 10, 000 JPY for 2013 based on the industry average is still low, to match industry average the company would need to trade at near 18,000JPY. Central Japan Railway Company announced that it has reaffirmed the consolidated mid-year outlook for revenue at JPY 761,000 million, operating profit at JPY 213,000 million, ordinary profit at JPY 161,000 million, net profit at JPY 100,000 million, but lowered earnings per share from JPY 50,813.16 to JPY 508.13 for the fiscal year ending March 31, 2013. The Company has also reaffirmed the consolidated full-year outlook for revenue at JPY 1,552,000 million, operating profit at JPY 383,000 million, ordinary profit at JPY 285,000 million, net profit at JPY 173,000 million, but lowered earnings per share from JPY 87,906.77 to JPY 879.07 for the fiscal year ending March 31, 2013. The reduction of earning per share is mainly due to stock split. The Company has reaffirmed the midyear dividend forecast at JPY 5,000.00 per share, but has lowered the year-end dividend forecast from JPY 5,000.00 per share to JPY 50.00 per share, due to the stock split, for the fiscal year ending March 31, 2013. Central Japan Railway Company is mainly involved in the provision of railway services. The Company operates in four business segments. The Transportation segment is engaged in the operation of Tokaido Shinkansen railways, the conventional railways in the Tokai area, as well as the provision of bus services. The Distribution segment is engaged in the operation of department store business, as well as the merchandising business in train compartments and stations. The Real Estate segment is engaged in the leasing and subdivision of real estate, such as station buildings. The Others segment is engaged in the operation of hotel, tourism and advertising businesses, the manufacture of railway vehicles, as well as the provision of maintenance, inspection and repair services for various equipment.


Research Report Shayne Heffernan Ph.D www.livetradingnews.com CURRENT VALUATION

9022

Peers

T12M

F12M

F12M

P/E

7.52

6.72

11.97

EV/EBITDA

4.72

5.85

6.74

Div Yield

1.5%

1.6%

2.3%

EV/Sales

1.99

2.46

0.68

P/CF

2.88

2.71

3.05

P/B

0.97

0.81

0.76

Anul Curr Price/Rev/Shr: Curr P/E Excl Extra, LTM: P/E Excl. Extra Items: Curr P/E Normalized, LFY: Curr Price/CF/Shr: Curr Price/Tang Bk, Tot Eqty: Curr EV/Tot Revenue (LFI/LTM): Curr EV/EBITDA (LFI/LTM): Curr EV/EBIT (LFI/LTM): Curr Mkt Cap (m): (+) Tot Debt Cap, LFI (m): (-) Cash & Equiv, LFI (m): (=) Curr EV, LFI (m): Curr EV/Tot Revenue (LFY): Curr EV/EBITDA (LFY): Curr EV/EBIT (LFY): Curr Mkt Cap (m): (+) Tot Debt Cap, LFY (m): (-) Cash & Equiv, LFY (m): (=) Curr EV, LFY (m):

LFI

LTM

0.81

LFY 0.84 7.75

--

-0.95

0.88 9.56 9.55 3.38 1.02 1.89 4.87 7.14

1,328,700.00 1,706,711.00 63,782.00 2,971,629.00 2.01 4.84 8.23 1,328,700.00 1,789,955.00 81,151.00 3,037,504.00


Research Report Shayne Heffernan Ph.D www.livetradingnews.com

The core of JR Central's operations is the Tokaido Shinkansen, the main transportation artery linking Japan's principal metropolitan areas of Tokyo, Nagoya, and Osaka. The company also operates a network of 12 conventional lines centered on the Nagoya and Shizuoka areas.


Research Report Shayne Heffernan Ph.D www.livetradingnews.com

Percentages of Japan as a whole Population Density (As of the end of March 2011)

Consolidated Operating Revenues Composition


Research Report Shayne Heffernan Ph.D www.livetradingnews.com

Segment

Company Name

JR Tokai Bus Company Transportation

Capital Shareholding (Millions of (%) yen) 100.0

Bus services

JR Tokai Logistics Company 300

90.0

Logistics business

Tokai Transport Service Company

295

100.0

Railway business

10,000

59.2

Department store operations

Merchandise JR Tokai Takashimaya Co.,

1,747

Business Activities


Research Report Shayne Heffernan Ph.D www.livetradingnews.com Segment

and Other

Real Estate

Company Name

Capital Shareholding (Millions of (%) yen)

Business Activities

Ltd. JR-Central Passengers Co., Ltd.

998

100.0

Food and beverage sales Wholesale and retail sales

Tokai Kiosk Company

700

100.0

Wholesale and retail sales

JR Tokai Food Service Co., Ltd.

295

51.6

Food and beverage sales

JR Tokai Corporation

100

70.0

Wholesale and retail sales

JR Central Building Co., Ltd. 45,000

100.0

Real estate leasing

JR Tokai Real Estate Co., Ltd.

16,500

100.0

Real estate leasing and sales

Shin-Yokohama Station Development Co., Ltd.

9,304

100.0

Real estate leasing

Toyohashi Station Building 1,880 Co., Ltd.

52.5

Real estate leasing

Tokyo Station Development 1,750 Co., Ltd.

100.0

Real estate leasing

Shizuoka Terminal Development Co., Ltd.

624

64.4

Real estate leasing

Hamamatsu Terminal Development Co., Ltd.

600

76.8

Real estate leasing

Nagoya Station Area Development

480

100.0

Real estate leasing


Research Report Shayne Heffernan Ph.D www.livetradingnews.com Segment

Company Name

Capital Shareholding (Millions of (%) yen)

Business Activities

Corporation

Other

JR Development and Management Corporation of Shizuoka

363

100.0

Real estate leasing

JR Development and Management Corporation of Kansai

30

100.0

Real estate leasing

JR Tokai Hotels Co., Ltd.

14,000

100.0

Hotel business

Shizuoka Terminal Hotel Co., Ltd.

50

0.0

Hotel business

JR Tokai Tours

490

70.0

Travel agency services

JR Tokai Agency Co., Ltd.

61

90.0

Advertising

Nippon Sharyo, Ltd.

11,810

51.3

Manufacturing of railway rolling stock

JR Tokai Construction Co., Ltd.

300

100.0

Construction

Chuoh Linen Supply Co., Ltd.

150

87.6

Linen supply services

JR Tokai Information Systems Company

100

100.0

Development, improvement and maintenance of computer system

The Japan Mechanised Works and Maintenance of Way

100

92.1

Track maintenance


Research Report Shayne Heffernan Ph.D www.livetradingnews.com Segment

Company Name

Capital Shareholding (Millions of (%) yen)

Business Activities

Co., Ltd. Tokai Rolling Stock & Machinery Co., Ltd.

80

60.5

Rolling stock and machinery maintenance

JR Central Consultants Company

50

100.0

Construction consulting business

Note: Two affiliated companies, Shinsei Technos Co., Ltd. and Railway Information Systems Co., Ltd., are accounted for by the equity method.


Research Report Shayne Heffernan Ph.D www.livetradingnews.com


Research Report Shayne Heffernan Ph.D www.livetradingnews.com

Interested in Investing in Asia? Linda Johnson, Business Development Director – Private Client Group, Heffernan Capital Management Sales@Heffcap.com Singapore 3 Raffles Place #07-01 Bharat Building Singapore 048617 Tel: +65 6329 6408 Fax: +65 6329 9699


Research Report Shayne Heffernan Ph.D www.livetradingnews.com


Research Report Shayne Heffernan Ph.D www.livetradingnews.com

Long Term this Chart indicates a substantial correction is due, however, the stock may fall a little more.


Research Report Shayne Heffernan Ph.D www.livetradingnews.com

This quarter the stock has been oversold


Research Report Shayne Heffernan Ph.D www.livetradingnews.com

Shayne Heffernan Ph.D. Economist/Hedge Fund Manager Live Trading News Thomson Reuters Knightsbridge Law Heffernan Capital Management HCMMedia Heffernan Shipping Member Chinese Society of Economists American Economic Society Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management Sales@Heffcap.com Singapore 3 Raffles Place #07-01 Bharat Building Singapore 048617 Tel: +65 6329 6408 Fax: +65 6329 9699 Email : info@heffcap.com


Central Japan Railway Remains a Must Own