The Stock Listing and Business Value Estimation of Japan Post Holdings

Following the enactment of the “Act for Partial Revision of the Postal Service Privatization Act and Others” on April 27, 2012, the Japan Post Group announced a stock listing plan. The main point of this plan is that Japan Post Holdings (JPH), a 100% government-owned holding company of the group, will start selling its shares, with a target period of autumn 2015 and that the proceeds from the sale of shares are supposed to be devoted to funding reconstruction in the area damaged by the Great East Japan Earthquake 2011. This paper seeks to estimate, based on published financial information, the business value of JPH, which is an important premise for the debate regarding future postal service reforms, and, the issue of the stock listing in particular. For this purpose, we use what is called the “residual income model,” in which the research takes on the nature of a sensitivity analysis. Our research results reveal that the business value of JPH can be estimated to be in the range of 5.06 to 8.61 trillion yen (49.2 to 83.8 billion US dollar), or 5.81 to 7.59 trillion yen (56.2 to 73.8 billion US dollar), and that to achieve a PBR > 1, capital cost must be less than 5% or 4%.