Quicky on Central Japan Railway (9022 JP)

A bet on tourisms returning to Japan. I definitely would want to …

This is not investment advice. Please read the disclaimer. I might own discussed stock(s) currently or at a later time. I might transact in any securities at any time.

I liked Japan very much as a tourists, as you may know! And i am not alone. Japan enjoyed more and more foreign tourists and the government had plans for growing these numbers. There were many reasons to go to Japan:

  • a westernized Asian country which has kept its traditions (a great combination)
  • great food for surprisingly low prices (sure, some Westerners would never try sth. without a Starbux or MCD logo on it, but that is their fault/stupidity)
  • a very safe country
  • a great service culture
  • not least the great public transportation incl. maybe the best highspeed railway / bullet trains (this is a must do for Germans, who, supposedly come from a country with engineering prowess and great infrastructure)
  • … but the best thing is, tourists can buy a Japan Rail Pass and thus travel the country most comfortably for very low prices! (one has to buy them before going to JP if i remember correctly)

With covid the number of foreign tourists (and general travel) in JP came to a sudden halt. Since Japan has a very old population with assumingly higher risks reg. covid the country only recently began to open up again (sadly we had to cancel our planned trip in 2022 after enjoying one of the best holidays ever in 2018 in Japan. No tourism might experience a revival especially since

  • Japan experiences very low inflation vs other countries
  • the JPY is weak against other currencies
  • tourists interested in Asia might still find China closed and thus flock to JP

This could be a rather simple bet on Central Japan Railway (9022 JP) to return to pre-covid profitability due to normalizing train passenger numbers and other activities (ie department stores). In Dec’19 the stock traded at JPY 22000 vs now at 16000 after a low in between at 12500.

CJR historically consistently generated ROEs above 10% since 2005 until before covid, and mostly traded in a range of 1-2x P/B vs currently at 0.9x. But, they have net debt and high capex can push FCF down, which could take a turn for the worse with delays and cost overruns at ongoing big projects.

Further reads


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