Kyushu Railway Has Solid Start; Earthquake Casts Shadow

Kyushu Railway, or JR Kyushu, faces structural headwinds, including a declining and aging population. In addition, train travel in Kyushu is less popular than other, more densely populated and congested areas in Japan. Cars are a viable alternative, with around 60% of the island’s occupants owning a private vehicle. We expect greater earnings growth in the nonrailway segments, which have surpassed transportation earnings since fiscal 2021, driven by the pandemic hit on rail passenger numbers as well as investments in non-rail segments. We forecast the nonrailway segments to contribute about three-fourths of group earnings by fiscal 2028 from about 40% prepandemic.