-- The trading debut of Tokyo Metro Co., which runs one of the world’s largest subway systems, will test the bull case for the Japanese stock market as its biggest listing in six years.The initial public offering of Tokyo Metro, which runs an extensive network of underground train services in the world’s most-populous metropolitan area, raised ¥348.6 billion as investors were attracted by its reputation for safety and reliability.
The IPO price of ¥1,200 and Tokyo Metro’s estimated dividend of ¥40 per share for the fiscal year ending March 2025 gives a 3.3% yield. That compares with less than 2% for ground transport companies in Japan, according to data from the Tokyo Stock Exchange as of end-September.On top of that come perks for investors such as free train tickets and golf, which Hiroaki Tomori, executive fund manager at Mitsubishi UFJ Asset Management Co., estimates would increase the dividend yield to 4.
Tokyo’s subway operates with an efficiency that can seem astonishing to visitors from other major global cities, where the metro systems are dogged by delays, breakdowns and strikes. The smooth operation is comprehensively integrated with other networks, such as Japan Rail and the Tokyo metropolitan-owned Toei subway.
For the moment, it may keep its edge in profitability over other railway operators in Tokyo, thanks to millions of daily passengers and a highly concentrated operation, said BI analyst Denise Wong. But Japan’s declining population will be a risk and expansion may gradually slow through 2030, she said.
“This is not a high-growth asset,” said Jon Withaar, head of Asia special situations at Pictet Asset Management SP Pte., who runs an equity strategy that seeks to capture long-term trends such as improving corporate governance in Japan. “This is not a tech company or a semiconductor company, but for a certain subset of investors, particularly those that are more conservative, it’s a pretty good, high-yielding investment proposition.