Hokkaido Power (9509): 0.6x PB Missing Cost Cuts from Nuclear + DC + Rapidus

I wrote a short note on Hokkaido Electric Power (Hepco/Cap Y256 Bn) in October 2024 (note attached), highlighting the potential for a major profitability boost from its nuclear plant restart and data center demand, versus its ultra-low valuation at around 0.29x P/B at the time.

I did not follow up then because the nuclear restart was delayed longer than I had hoped.

Now I think it is worthwhile revisiting Hepco, which has three key drivers: substantial cost reductions from the nuclear restart, upside from data center-related demand, and additional benefits from Rapidus-linked developments.

The stock now trades at about 0.61x P/B, compared with roughly 0.99x for Kyushu Electric Power (TSMC beneficiary with nuclear already restarted) and about 0.77x for Shikoku Electric Power (one nuclear unit already in operation). Hepco’s EV/EBITDA is around 9x, and its equity ratio is relatively low at about 18.7%, given heavy capex requirements (similar to Kyushu Electric’s equity ratio of roughly 18–19%).

Kyushu’s expected ROE is about 12.8% vs. Hepco’s roughly 6.3%, underscoring both the gap in profitability and the potential catch-up when the three drivers materialize.

I’ve laid out my full thesis in a detailed note to my clients. If you’d like to receive my notes on a regular basis, you’re welcome to try my service for free. I’m confident that once you experience the value, convenience, and quality I provide, you’ll be glad you gave it a try. Even clients with their own dedicated Japan research teams often tell me they find my perspective unique and actionable.

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