[Summary]

The reason why Keisei Electric Railway (9009)'s stock price is weak is quite easy to understand.

Access to inbound tourists and Narita Airport is not bad. In fact, airport transportation, including the Skyliner, is strong. Despite this, the company's financial results show that profits have not increased, and profits are expected to decline this fiscal year as well.

Operating revenue for the fiscal year ending March 2026 was 332.424 billion yen, an increase of 4.1% from the previous fiscal year. On the other hand, operating income was 33.974 billion yen, down 5.6%, and net income attributable to owners of parent was 48.023 billion yen, down 31.4%.

Furthermore, the forecast for the fiscal year ending March 2027 is that while operating revenue is expected to increase by 8.2% to 359.800 billion yen, profits are projected to continue to decline, with operating income of 31.000 billion yen, ordinary income of 50.500 billion yen, and net income of 39.300 billion yen.

This is what the market hates.

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Keisei is not just a railway stock. It is an asset stock that has held a large amount of Oriental Land (OLC) stock, and is an event-driven stock that is also influenced by the capital policy demands of activists.

Therefore, the current decline cannot be explained simply by ``bad railways''. Performance, guidance, OLC stock, capital policy expectations. These four things are getting heavier at the same time.

First impression of financial results: sales increased but profits did not increase

Keisei Electric Railway's performance for the fiscal year ending March 2026 is not bad if you just look at the top line.

ItemResults for the fiscal year ending March 2026Compared to the previous year
Operating revenue332.424 billion yen+4.1%
Operating income33.974 billion yen-5.6%
Ordinary profit58.605 billion yen-5.1%
Net profit48.023 billion yen-31.4%

In the transportation industry, access to Narita Airport was strong. Passenger transportation revenue for railways has also increased, and demand for paid limited express trains, namely those surrounding the Skyliner, is also strong.

Still, operating profit decreased.

The reason is simple: it costs a lot. Transportation business operating expenses and cost of sales increased to 243.773 billion yen, and selling, general and administrative expenses increased to 54.676 billion yen. Personnel costs, power costs, equipment renewal, group reorganization, and the burden associated with the absorption-type merger of Shin-Keisei Electric Railway are eating up a significant portion of the increase in revenue.

The market has cooled down a bit here.

This is because the view that ``if inbound tourism returns, railway stocks' profits will increase'' simply did not apply to Keisei.

The 31% decline in net profit was largely due to the backlash of extraordinary profits.

The 31.4% decline in net income is somewhat misleading if we look only at the deterioration in business operations.

In the previous fiscal year ending March 2025, there was a large extraordinary profit of 53.157 billion yen from the sale of stocks of affiliated companies. As this was eliminated in the fiscal year ending March 2026, the final profit decreased significantly.

In fact, the operating profit decline rate was 5.6%, which is not as large as the net profit.

However, this is a difficult point for stock prices.

Investors won't just look at it as, ``It's not a problem because it's temporary.'' This is because Keisei's valuation takes into account gains from the sale of OLC shares and unrealized assets.

In other words, while the rebound from extraordinary profits is a temporary accounting factor, it is also part of Keisei's capital policy story itself.

This is different from ordinary railway companies.

Forecasts for this period are quite heavy

What was more effective for the stock price was the company's plan for the fiscal year ending March 2027.

ItemForecast for the fiscal year ending March 2027Compared to the previous year
Operating revenue359.800 billion yen+8.2%
Operating income31.000 billion yen-8.8%
Ordinary profit50.5 billion yen-13.8%
Net profit39.300 billion yen-18.2%

Sales will increase. But profits will decline.

This guidance is pretty unpleasant for investors. In particular, Stock Forecast Pro's ordinary profit forecast of 50.5 billion yen for the fiscal year ending March 2027 is 19.1% below the IFIS consensus.

The market had high expectations for Keisei on multiple factors: airport access, inbound tourism, OLC stock, and capital policy. The company presented a fairly conservative profit forecast.

Under these circumstances, it is natural for short-term investors to sell.

Fluctuations in the “unrealized asset story” of OLC stock

Oriental Land (4661) cannot be avoided when talking about Keisei Electric Railway.

Keisei has long been seen as a company with large holdings of OLC stock. There was a strong view in the market that Keisei was valued more as an ``asset stock with OLC shares'' than as a railway company.

Activist Palliser Capital has stepped in to demand that OLC's ownership ratio be lowered, capital efficiency improved, and shareholder returns strengthened.

This issue itself has both positive and negative effects on Keisei stock.

If you sell OLC shares, you will receive a profit from the sale and expect a return to shareholders. On the other hand, equity method investment profits will decrease. Furthermore, the premium that Keisei received as an ``OLC-containing asset stock'' will fade.

In other words, the market is currently in a state of confusion.

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This makes the price movement of Keisei stock difficult.

The essence of stock price decline

The current weakness in Keisei stock can be broken down into three parts.

FactorContentsImpact on stock price
Decrease in profits in the fiscal year ending March 2026Operating income and net income decrease despite increased salesExpectations for profit growth in the core business decline
Forecast for profit decline in the fiscal year ending March 2027Ordinary profit of 50.5 billion yen and net profit of 39.3 billion yen are plannedIt is easy to feel that the consensus has not been achieved
Treatment of OLC stockTug of war between sales gains/return expectations and decline in equity method profitsAsset stock premium fluctuates

The combination of the first and second is particularly large.

Even though inbound tourism is strong, profits are not increasing. It will not grow this season either. This is a pretty bad look for a railroad stock.

And in Keisei's case, the capital policy of OLC stock plays into this. Therefore, the stock price reaction tends to be larger than that of ordinary transportation stocks.

Positive materials also remain

Of course, Keisei is not without materials.

Narita Airport access is structurally strong. If the number of visitors to Japan remains at a high level, demand for the Skyliner will be supported. The absorption-type merger of Shin-Keisei Electric Railway will also incur costs in the short term, but it may lead to more efficient group operations in the medium term.

There is also real estate and development along the line. If the sale of OLC shares progresses, there will be room for stronger returns and financial improvements.

In other words, Keisei is not a bad company.

However, stock prices are not determined solely by whether or not a company is a good company. There was a huge difference between the profit growth expected by the market and the company's profit reduction plan. This decline reflects that.

Investment strategy

In the short term, it is a phase to review stocks after the financial results and see where the selling stops.

There are three points to look at.

Points to checkHow to view
Operating profit marginCan you turn increased sales into profit
Policy for additional sales of OLC sharesBalance between return expectations and decline in equity method profits
Narita Airport TransportationCan Skyliner demand absorb cost increases

Personally, I think it's a little early to view Keisei just as an "undervalued railway stock" right now.

The core business is strong, but profit margins are still heavy. The capital policy is interesting, but the more you sell OLC shares, the more your view as an asset stock changes. Rather than simply buying on the spur of the moment, it is better to make a decision based on the company's explanation, shareholder returns, additional sales of OLC shares, and full-year progress.

On the other hand, if operating profits bottom out and capital policy progresses in a way that the market agrees with, Keisei stock will become quite interesting.

Summary

The decline in Keisei Electric Railway's stock price is not due to a slowdown in inbound demand.

In fact, access to Narita Airport is strong. The problem is that this strength is not fully translated into profits.

In the fiscal year ending March 2026, operating revenue increased to 332.424 billion yen, but operating profit decreased to 33.974 billion yen and net income decreased to 48.023 billion yen. For the fiscal year ending March 2027, ordinary profit is expected to decline by 50.5 billion yen and net profit by 39.3 billion yen.

In addition, while the capital policy surrounding OLC shares generates gains on sales and expectations for returns, it also causes a decline in equity method profits and fluctuations in the asset stock premium.

What the market is looking at is, ``Even though we have strong airport access, why aren't profits increasing?''

Keisei stock's reversal will depend on its ability to turn increased sales into operating income and its convincing capital policy, including OLC stock. You will need these two.

Reference information

This article is for educational and informational purposes only, based on public information. It is not a recommendation or solicitation to buy or sell any specific security or financial product. Although care is taken with accuracy, the content and future investment outcomes are not guaranteed. Final investment decisions should be made at your own judgment and responsibility.