Tokyo Subway (Metro) was listed on the Main Market of the Tokyo Stock Exchange on the 23rd. There has been a lot of interest from individual investors and others, and the listing of the company, which is a daily way of life for people living in the Tokyo metropolitan area, is expected to help expand the investor base.
After trading started at 9:00 am with a buying trend, the stock hit an opening price of 1,630 yen, 36% higher than the public price of 1,200 yen, around 10:06 am. After that, the stock rose 47% to 1,768 yen, and the market capitalization surpassed the 1 trillion yen mark.
Mitsunari Akino, president of Ichiyoshi Asset Management, pointed out, “The stock has risen even after its initial price, so it is off to a good start. There is a sense of security in its performance, and it is a popular stock among individual investors. . ” Noting that it could be included in the world’s major stock indexes, he said, “I think it will attract more attention from overseas investors,” and he expects the price to about 2,000 yen in the future.
On the other hand, Taku Ito, chief equity fund manager at Nissay Asset Management, explained, “The public offering price was too cheap. We thought a range aimed at around 1,600 yen was reasonable.”“We don’t expect significant profit growth, but it has defensive properties. We do not expect the stock price to rise much from here, but at the current level, we think it can be held for the long term as a result. stock.”
According to interviews with multiple lead underwriters, there was demand from domestic and foreign investors for the number of shares offered before the listing, which was more than 15 times more. IPO analyst Kazumi Tanaka of DZH Financial Research expected the starting price to be around 1,500 yen. According to Ichiyoshi Securities, the average initial price increase/decrease rate of the 61 companies that made initial public offerings (IPO) this year (on the 22nd) was 34%.
The government owns 53.4% of Tokyo Metro shares, while the Tokyo metropolitan government owns 46.6%, and each sold half of its shares in conjunction with the listing. The total offering price was 348.6 billion yen, and the market capitalization based on the initial price was 950 billion yen, making it the largest IPO since mobile carrier SoftBank went public in 2018.
Naoko Nohara, manager of the investment information department at Ichiyoshi Securities, said, “The stock has strong features as an asset stock due to its shareholder interests and good dividend yield.”
Market participants also cite stability of earnings as an attractive feature. Since the route is limited to urban areas, it is believed that population decline will not affect it. The average number of passengers carried per day ranks second among major railway companies, including the three JR Honshu companies.
Comparison of the number of people transported per day (unit: 10,000 people)
Source: Created by Bloomberg from materials from each company
On the other hand, there is a high dependence on the railway business and a low proportion of the real estate business. Some believe the company has less room for profit growth than other private railroads. Due to the impact of the new coronavirus, the company has posted a final deficit for the second consecutive term during the fiscal year ending March 2022. The number of passengers carried has also decreased by more than 10% compared to the fiscal year pre-corner ending March 2019.
Consolidated net income for the current fiscal year (ending March 2025) is estimated to be 52.3 billion yen, an increase of 13% over the previous fiscal year. Due in part to the increased use of inbound tourists, the operating profit of the transportation industry is expected to rise 18% year-on-year to 75.3 billion yen, while the operating profit of the real estate business is expected to decrease 1.4% year-on-year to 4.5 billion yen.
Naoki Fujiwara, senior fund manager at Shinkin Asset Management Investment Trust, points out that because the railway business has a public aspect, it is difficult to raise fares sharply in pursuit of profits. There is limited room for growth in the real estate business, so “While the results will be solid, there is no sense that things will continue to rise,” he said, adding that for investors, “Hopefully I believe the stock price will remain stable without falling below 1,200 yen and that dividends will be paid.”It would be good if we could achieve shareholder benefits.”
Trends in the number of passengers carried by the Tokyo Metro per day
Source: Created by Bloomberg from company materials
A simple comparison of the number of people carried by the Tokyo Metro per day shows that about one in two Tokyo residents use it. It operates nine lines, including the Tozai Line, Ginza Line, Marunouchi Line, and Namboku Line, with a total route length of 195 kilometers. There are 180 stations on each line. new york citysubwayEven when compared to other subways abroad, the number of users of Tokyo Metro is attractive.
It is attracting attention not only because it is the first large-scale project in six years, but also because it is part of the transport infrastructure necessary for everyday life. Toshio Morita, chairman of the Japan Securities Dealers Association, said at a press conference on the 16th, “I think it has a big advantage in terms of expanding the investor base.” of individual investors who will take the opportunity of Tokyo Metro’s listing to start investing in stocks.
(Update articles by adding stock price trends and comments from market participants)