JP 摩根-亚太地区-物流业-日本物流业：三巨头的第三季度业绩更新-2-40页.pdf
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www.jpmorganmarkets.com
Asia Pacific Equity Research
12 February 2019
Equity Ratings and Price Targets
Mkt Cap
Rating
Price Target
Company
Ticker
(
¥
bn)
Price (
¥
)
Cur
Prev
Cur
End
Date
Prev
End
Date
Nippon Express (9062)
9062 JT
642.71
6,440
OW
n/c
7,630
Dec
-
19
8,350
n/c
SANKYU (9065)
9065 JT
326.08
5,000
OW
n/c
7,000
Dec
-
19
n/c
n/c
Hitachi Transport System (9086)
9086 JT
343.16
3,070
OW
n/c
3,750
Dec
-
19
3,500
n/c
Source: Bloomberg, J.P. Morgan estimates. n/c = no change.All prices as of 08 Feb 19.
Logistics: Big Three’s
3Q
Results Update
Poised For Rerating On Six- To 12-Month Horizon
Japan Equity Research
Transportation, Real Estate, REIT
Ryota Himeno
AC
(81-3) 6736-8639
ryota.himeno@jpmorgan.com
Bloomberg JPMA RHIMENO <GO>
JPMorgan Securities Japan Co., Ltd.
See page 35 for analyst certification and important disclosures, including non
-
US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aw
are that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report
as only a single
factor in making their investment decision.
Amid an uncertain market environment, our recommended investment
strategy for the transport sector in 2019 comprises: 1) a "barbell strategy"
combining marine transport with railways and 2) a company-specific
approach to logistics. Our order of preference among subsectors is: railways
> marine transport > logistics > airlines. We expect logistics companies to see
rising profits as service prices continue to correct upward, but our share
price outlook is tempered by:) waning upward momentum in service pricing,
2) risk of slower freight movement following the upcoming consumption-tax
hike, and 3) a potential reaction to 2018’s share price gains. This has us
advising a company-specific approach to the subsector and recommending
Nippon Express, Hitachi Transport System, and Sankyu—all Overweight—as
our top picks in view of company-specific catalysts for the first two and a
longer-term growth story for the third.
Nippon Express—bullish despite likely decline in FY2019 profits: Investors
are concerned about 1) risk of a slowdown in the air freight business and 2)
higher costs in FY2020 (“equal pay for equal work” implementation, system and
other strategic expenditures). We think the former is not fully priced in and
accordingly apply a more conservative valuation than previously. We expect the
latter to be priced in with the February 22 announcement of the new medium-
term business plan. We expect equal pay for equal work to add ¥10 billion in
costs and result in profits declining YoY in FY2020. However, we also expect the
new medium-term plan to target higher profit margins and an increase in RoE
driven by asset sales and shareholder returns and accordingly look for investors to
assess it from a longer-term perspective.
Sankyu—poised for stable growth: Our bullishness reflects: 1) ongoing demand
for plant engineering and maintenance driven by superannuation, 2) rising profit
margins (as shorter construction times and improved operating efficiency drive
down CoGS and also as the company avoids unprofitable customers and raises
prices), and 3) Sankyu’s leveraging of its strong staff mobilization capabilities to
broaden customer domains and expand execution capabilities. While we see a
shortage of near-term catalysts in expectation of profits falling sharply in 1Q
FY2019 as the company comes off a major year for shutdown maintenance in
2018, we look for profits to accelerate from 2Q as comps ease and new
construction orders come into play. With the long-term growth scenario intact and
the near-term earnings cycle poised to bottom, we think the shares have corrected
enough to make them attractive.
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