JR Tokai shares tumble on $45 billion maglev project

TOKYO (Reuters) - Shares in Central Japan Railway Co (9022.T) tumbled 9 percent on Wednesday after it said it will itself finance a $45 billion bullet train line it plans between Tokyo and Nagoya.

Central Japan Railway, also called JR Tokai, said the new train line would enable larger-scale maintenance of its current 43-year-old line between Tokyo and Osaka and help prevent passengers switching to airlines.

The bullet train operator said the new magnetic levitation line, due to start operations in 2025, would cost an estimated 5.1 trillion yen ($44.72 billion).

Its shares were trading at 1.03 million yen in early afternoon, their lowest point since December 2005.

Central Japan Railway expects recurring profit to fall to around 70 billion yen in the 2026/27 business year on operating costs and depreciation charges after which it would gradually rise to average around 140 billion yen between 2026 to 2035.

That compares with a targeted recurring profit -- which is before tax and extraordinary items -- of 249 billion yen for the current business year, ending next March 31.

Daiwa Institute of Research analyst Hajime Hitotsuyanagi said in a report that the project costs could be larger than the company estimates, especially as the line would probably need to be extended to Osaka to be competitive with airlines.

Central Japan Railway also said its long-term debt levels would expand to 4.9 trillion yen in 2025/26 from around 3.4 trillion yen now.

It said operating cash flow of around 400 billion yen per year would enable it to reduce debt to current levels after the maglev service had been in operation for eight years.

Nikko Citigroup analyst Naoko Matsumoto said in a report that the company's formal announcement of plans and its disclosure of a minimal level of earnings should be seen by the market as a positive.

(Reporting by Edwina Gibbs, Editing by Michael Watson)