Seibu Holdings (9024.T) Stock Analysis

Seibu holdings is attractively valued and positioned to benefit from Japan's post-COVID opening, the weak yen, and a strong tourism industry.

Table of contents:

Quick Stock Overview
Seibu by the numbers.

1. Executive Summary
A brief discussion of Seibu Holdings and its potential appeal to investors.

2. Extended Summary
A more detailed explanation of Seibu's business and competitive position.

3. The Great Reopening of Japan
Japan's post-Covid reopening, the weak Yen, and their impact on tourism.

4. Seibu Holdings
A diversified business covering the whole Japan tourism sector.

5. Seibu's Strategy
Strong synergy between all assets, and undervalued land assets.

6. Financials
Stabilizing balance sheet, back to green financials and undervalued market cap.

7. Conclusion

Quick Stock Overview

Ticker: 9024.T

Key Data

• Industry: Hotel / Railroad / Real Estate

• Market Capitalization ($M): 3,530

• Price to sales: 1.12

• Price to Free Cash Flow: -

• Dividend yield: 2.81%

• Sales ($M): 3,130

• Free cash flow/share: -

• P/E: 4.87

1. Executive Summary

Seibu Holdings is a Japanese hotel, railway, leisure activities, and real estate conglomerate. It operates 167km of railway and 83 hotels, most of which are in Japan. It also owns a total of 474 km2 of land, most of which is underutilized and undervalued.

The group suffered during the COVID pandemic, reaching an all-time low in January 2021. It also had to sell some of its hotels in early 2022 to stave off a liquidity crisis. Consequently, the group is trading at a low valuation, assuming little to no growth.

This valuation ignores the fact that Japan is now reopening and coming back to normal. Even the inbound tourist numbers of January 2023, up x83 year-to-year, are still much below the 2019 levels. So Seibu's results should be coming back to a more normal level, in line with its historical performances.

In addition, the Japanese tourism sector is boosted by the short-term trend of the weak yen and the long-term trend of Japanese culture's increasing popularity with younger (and even not-so-young anymore) generations.

Seibu's balance sheet is adequate, even if the group might need to roll over some short-term debt to stay liquid enough in 2023.

In the long run, Seibu's large land holdings are probably where most of the group's total value is locked. Even very conservative estimates indicate these lands could be worth as much as the entire current market cap and maybe several times more.

Seibu will be most fitting for investors with a very long-term focus, willing to trade off liquidity for higher long-term returns.