November 22, 2024
Tokyo Metro’s Listing to Test Appetite for Japanese Stocks #JapanFinance

Tokyo Metro’s Listing to Test Appetite for Japanese Stocks #JapanFinance

CashNews.co

(Bloomberg) — 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.

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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 ($2.3 billion) as investors were attracted by its reputation for safety and reliability. The sale is a key gauge of appetite for Japanese shares just days before a crucial election that may shape expectations for further interest-rate rises.

Tokyo Metro priced at the top of the range, indicating hot demand for a stable stock with a juicy dividend yield that drew in retail buyers. The listing brings into focus the contrast between Tokyo’s efficient, government-owned subway system, and counterparts in major global cities such as New York and London, which are weighed down by debt and aging infrastructure.

“This is an attractive asset with brand recognition,” said Kirk Boodry, an analyst at financial-advisory firm Astris Advisory Japan. “The financials are generally stable, not a lot of volatility.”

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 4.9%. That’s an attractive in a country where years of ultra-low rates have starved investors of returns.

“Investors who have had no experience in stock trading felt that it was like a festival and wanted to apply for the commemorative issue,” said Yutaka Tokushige, manager of the business promotion division at the head office of FFG Securities Co., one of the underwriters.

Read: Tokyo Metro IPO Lures Train Enthusiasts in Japan: Dispatch

Kazumi Tanaka, an IPO analyst at DZH Financial Research Inc. expects the shares to start trading Wednesday at around ¥1,500.