Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Fast Retailing reported significant gains in revenue and profitability for the first quarter of FY2025.</li>
<li>Strong performances in North America &amp; Europe (+31% YoY), and Asia (+17%), offset challenges in Greater China (-1%)</li>
<li>Overall revenue and operating profit figures came in marginally stronger than our estimates</li>
</ul>


Fast Retailing reported significant gains in revenue and profitability for the first quarter of FY2025.
Strong performances in North America &amp; Europe (+31% YoY), and Asia (+17%), offset challenges in Greater China (-1%)
Overall revenue and operating profit figures came in marginally stronger than our estimates


Fast Retailing (9983) | Global Growth Shines Amid China Challenges

<ul>
<li>Inditex's rare quarterly miss on sales and profit, driven by currency fluctuations, may heighten sensitivity around Fast Retailing's upcoming Q1 results</li>
<li>For Fast, the risk would be a top-line miss given high valuation multiples and elevated expectations</li>
<li>Over the past several quarters, Fast's superior top line growth has supported higher valuation multiples. We expect 9% revenue growth in Q1</li>
</ul>


Inditex's rare quarterly miss on sales and profit, driven by currency fluctuations, may heighten sensitivity around Fast Retailing's upcoming Q1 results
For Fast, the risk would be a top-line miss given high valuation multiples and elevated expectations
Over the past several quarters, Fast's superior top line growth has supported higher valuation multiples. We expect 9% revenue growth in Q1


Fast Retailing (9983) | Inditex's Q3 Miss - Implications for Uniqlo

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The review period for the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 Index</a> March rebalance ends in January. There could be one outright change and one or two others driven by sector balance.</li>
<li>Depending on the changes, passive trackers will need to buy between 8.2-20.5x ADV (8.75%-24.5% of real float) and sell between 9-38x ADV on the deletions.</li>
<li>
<a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing</a>'s PAF could see a double reduction to keep the stock weight capped at 10%. There will be huge passive selling leading to funding inflows for other index constituents.</li>
</ul>


The review period for the Nikkei 225 Index March rebalance ends in January. There could be one outright change and one or two others driven by sector balance.
Depending on the changes, passive trackers will need to buy between 8.2-20.5x ADV (8.75%-24.5% of real float) and sell between 9-38x ADV on the deletions.

Fast Retailing's PAF could see a double reduction to keep the stock weight capped at 10%. There will be huge passive selling leading to funding inflows for other index constituents.


Nikkei 225 Index Rebalance Preview (Mar 2025): Ranking, Capping, Funding & Other Changes

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a> investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.</li>
<li>It also raised its H2 dividend by 20+% so the full-year div will be more than 20% higher than previously forecast and up 35+% since last year. All good. </li>
<li>Except for the selling. Potentially lots of selling. And more outperformance begets more selling. Then even more selling in 2024. And 2025? What about 2025? More outperformance begets more selling.</li>
</ul>



Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
It also raised its H2 dividend by 20+% so the full-year div will be more than 20% higher than previously forecast and up 35+% since last year. All good. 
Except for the selling. Potentially lots of selling. And more outperformance begets more selling. Then even more selling in 2024. And 2025? What about 2025? More outperformance begets more selling.


Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity

<ul>
<li>Domestic Uniqlo SSS (including e-commerce) were +14.9% in June. Positive</li>
<li>Impressive +8.1% increase in customer traffic and +6.3% gain in per-customer spend</li>
<li>I have a bearish view on Fast Retailing due to rich valuations (25x EV/EBIT). However, the share price may perform well in the run up to the Q3 report.</li>
</ul>


Domestic Uniqlo SSS (including e-commerce) were +14.9% in June. Positive
Impressive +8.1% increase in customer traffic and +6.3% gain in per-customer spend
I have a bearish view on Fast Retailing due to rich valuations (25x EV/EBIT). However, the share price may perform well in the run up to the Q3 report.


Japan

FAST RETAILING CO., LTD. operates a chain of clothing stores, UNIQLO, throughout Japan and in other markets overseas including UK, China, Hong Kong, South Korea, US, France, Singapore and Russia.  The Company designs, manufactures, and retails its own line of casual clothing.

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Fast Retailing (9983 JP)

Fast Retailing (9983) | Global Growth Shines Amid China Challenges

Fast Retailing sees strong revenue and profit growth in Q1 FY2025, with North America & Europe leading the way despite challenges in Greater China.

Mark Chadwick

Fast Retailing (9983) | Inditex's Q3 Miss - Implications for Uniqlo

Fast's strong growth in recent quarters has supported elevated valuation multiples, with an expected 9% revenue growth in Q1.

Mark Chadwick

Nikkei 225 Index Rebalance Preview (Mar 2025): Ranking, Capping, Funding & Other Changes

There should be 1 change, could be 3 due to sector balance. The impact on the potential changes varies from 8-38x ADV. Fast Retailing could see a...

Brian Freitas

Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity

Fast Retailing announced decent earnings for Q3 and upgraded forecasts for August 2023. It also raised its full-year dividend vs previous guidance....

Travis Lundy

Fast Retailing (9983) | Red Hot Summer

Domestic Uniqlo SSS up 14.9% in June, with strong customer traffic and per-customer spend. Bearish on Fast Retailing due to high valuations, but...

Mark Chadwick

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Fast Retailing (9983) | Global Growth Shines Amid China Challenges

​Fast Retailing sees strong revenue and profit growth in Q1 FY2025, with North America & Europe leading the way despite challenges in Greater China.

Mark Chadwick

Fast Retailing (9983) | Inditex's Q3 Miss - Implications for Uniqlo

Fast's strong growth in recent quarters has supported elevated valuation multiples, with an expected 9% revenue growth in Q1.

Mark Chadwick

Nikkei 225 Index Rebalance Preview (Mar 2025): Ranking, Capping, Funding & Other Changes

There should be 1 change, could be 3 due to sector balance. The impact on the potential changes varies from 8-38x ADV. Fast Retailing could see a...

Brian Freitas

Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity

Fast Retailing announced decent earnings for Q3 and upgraded forecasts for August 2023. It also raised its full-year dividend vs previous guidance....

Travis Lundy

Fast Retailing (9983) | Red Hot Summer

​Domestic Uniqlo SSS up 14.9% in June, with strong customer traffic and per-customer spend. Bearish on Fast Retailing due to high valuations, but...

Mark Chadwick

Fast Retailing sees strong revenue and profit growth in Q1 FY2025, with North America & Europe leading the way despite challenges in Greater China.

Domestic Uniqlo SSS up 14.9% in June, with strong customer traffic and per-customer spend. Bearish on Fast Retailing due to high valuations, but...