| Valuation method | Value, ¥ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 4223.82 | 328 |
| Intrinsic value (DCF) | 679.93 | -31 |
| Graham-Dodd Method | 2809.12 | 184 |
| Graham Formula | 602.12 | -39 |
The Chugoku Electric Power Co., Inc. (9504.T) is a leading Japanese utility company specializing in the generation, transmission, and distribution of electric power. Headquartered in Hiroshima, the company operates across three key segments: Electric Power, Comprehensive Energy Supply, and Information and Telecommunications. Chugoku Electric Power generates electricity through a diversified mix of hydroelectric, thermal, nuclear, and renewable energy sources, including biomass and photovoltaic power stations. As of March 2020, the company managed 92 hydroelectric plants (2,905 MW capacity), 12 thermal power stations (7,801 MW combined), one nuclear plant (820 MW), and two solar facilities (6 MW). Beyond electricity, the company provides energy utilization services, including LNG and fuel sales, heat supply, telecommunications, and environmental consulting. Serving Japan's Chugoku region, the company plays a critical role in the country's energy transition, balancing traditional and renewable sources while supporting regional economic growth. With a market cap of ¥259 billion, Chugoku Electric Power is a key player in Japan's utility sector, emphasizing sustainability and grid reliability.
Chugoku Electric Power presents a stable investment opportunity within Japan's regulated utility sector, supported by consistent revenue streams (¥1.53 trillion in FY2025) and a diversified energy portfolio. The company's low beta (0.105) suggests defensive characteristics, appealing to risk-averse investors. However, its high total debt (¥3.15 trillion) and substantial capital expenditures (¥-378 billion) pose financial risks, particularly amid Japan's energy policy uncertainties. The dividend yield (~1.8% based on a ¥27/share payout) is modest but sustainable, backed by positive operating cash flow (¥186 billion). Investors should monitor Japan's nuclear energy policy shifts and renewable adoption rates, which could impact Chugoku's long-term competitiveness.
Chugoku Electric Power operates in a highly regulated market dominated by regional monopolies, with competition primarily arising from other Japanese utilities and emerging renewable energy providers. Its competitive advantage lies in its integrated infrastructure and diversified generation mix, which includes hydro (20% of capacity) and nuclear (8%), providing cost stability compared to peers reliant on imported LNG. However, the company lags in renewable energy adoption (photovoltaic capacity is only 6 MW), exposing it to transition risks as Japan accelerates decarbonization. Chugoku's regional focus limits customer base expansion but ensures predictable demand. Its debt burden is higher than industry averages, constraining flexibility. The company's telecommunications and energy services segments offer modest diversification but face stiff competition from specialized firms. Regulatory support for grid operators provides a moat, but long-term threats include decentralized solar adoption and potential nuclear phase-outs.