In today’s briefing:
- Keisei (9009): Connecting Narita and Tokyo
- Rakuten Bank (5838 JP): Premium Growth Neobank Still Trading at Attractive Valuations
- Nidec (6594) | Remain Cautious Despite Bullish Guidance
- Oriental Land: The 33.5x FY27 Consensus OP Bubble
- Rakuten Bank – In Japan With 65% Loan Growth
Keisei (9009): Connecting Narita and Tokyo
- Japan’s tourism scene is back in action albeit still missing a contribution from China.
- On-The-Ground research in Japan has confirmed the above point and the crowded Narita airport.
- Keisei Electric Railway Co (9009 JP)operates Skyliner which connects Narita Airport to downtown Tokyo.
Rakuten Bank (5838 JP): Premium Growth Neobank Still Trading at Attractive Valuations
- The sharp run-up in the share price since its IPO does not, in our view, mean that Rakuten Bank’s rally is done; there is further fundamental justification for a re-rating
- Rakuten Bank trades on a LTM PE multiple of 14.4x, LTM PBV ratio of 1.6x and an ROE of 13.2%, which is the best return of our neobank peers
- Relative to its peer group, Rakuten Bank has premium long-run growth prospects; conservatively estimating Rakuten Bank’s growth (8% pa), implies a PEG ratio in the range of 1.2x to 1.3x
Nidec (6594) | Remain Cautious Despite Bullish Guidance
- NIdec’s full year FY3/23 operating profit declined 41% to Y100b, far short of analyst estimates
- However, FY3/24 corporate guidance for Y220b in operating profit is very bullish and assumes a V-shaped recovery in margins
- Given the macro outlook and lack of clarity on the restructuring charges, we prefer to remain cautious.
Oriental Land: The 33.5x FY27 Consensus OP Bubble
- Oriental Land (4661 JP)’s revenue in 4QFY23 could miss consensus by around 12%, but its profitability could exceed consensus expectations by around 20%.
- The shares did not react to beating consensus and revising up its guidance in the last quarter. This suggests limited upside risk for the company’s shares following 4QFY23 earnings.
- Despite consensus medium-term OP estimates, Oriental Land appears to be significantly overpriced, with shares trading at a consensus FY27 EV/OP multiple of 33.4x.
Rakuten Bank – In Japan With 65% Loan Growth
- There are few, if any banks, in Japan that compare with Rakuten’s 65% loan growth
- The newly listed interbank stands out with exceptional ROE, not from leverage
- Credit metrics remain strong, with NPL cover especially high vs peers
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