Nippon Parking Development (2353): How can a parking company with ski resorts and theme parks be so profitable?

Please note: This article is for informational purposes only and is not intended as investment advice. The mention of specific stocks is not a recommendation to buy or sell any securities.

Nippon Parking Development Co., Ltd. (NPD) popped up on my screener while hunting for Japanese companies with high ROE and reasonable valuations. What caught my eye was their unique blend of businesses—parking lots, ski resorts, and theme parks.

It’s an intriguing synergy that seems to click, creating a diversified revenue stream. However, this fascinating mix comes with its own set of warning signs.

At a Glance

• Stock Price at Publication: 199 JPY

• P/E Ratio: 14.61x (TTM)

• Revenue Growth: 3.5%

• Operating Income Margin: 16.2%

• Return on Equity: 8.5%

• Market Cap: 69.33 B JPY

• Dividend Yield: 2.64%

Summary:

• Astonishing ROE: NPD boasts a remarkable 30% Return on Equity (ROE), raising eyebrows given its P/E ratio of just under 15x. This highlights the company’s exceptional profitability and management.

• Unique and Diverse Portfolio: NPD successfully operates parking lots, ski resorts, and theme parks. Domestic parking revenue grew by 9.0%, and international revenue increased by 6.2%. Ski resort revenue surged 19.5%, while theme parks saw a 6.5% dip. Their ability to excel in such varied sectors is impressive.

• Rapid Growth in New Segments: New areas are booming—ski resort consulting is up 15%, vacation rentals surged 18%, and educational programs increased by 12%. These segments, though currently small, are expanding rapidly.

• Successful International Expansion: NPD’s growth in Thailand and Korea is promising, with international revenue up by 6.2%.

• High P/B Ratio Concerns: The P/B ratio of 5.0x suggests overvaluation, but strong financial metrics like a 5-year Revenue CAGR of 6.9% and a 2.8% dividend yield make a compelling case.

Table of Content
1. Overview
2. Financial Summary
3. Valuation & Competitive Landscape
4. SWOT Analysis
5. KonichiValue Score