Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>We anticipate a sluggish beginning to the fiscal year with 1Q8/24 earnings reflecting slower growth in Japan, China, and Southeast Asia.</li>
<li>Our forecast for 1Q24 operating profit stands at ¥130 billion, slightly below the consensus estimate of ¥138 billion. Assuming our estimates are accurate, we anticipate a slightly negative share-price reaction.</li>
<li>Our bearish stance on the stock persists, driven by the fact that it trades at a premium to our DCF and at a premium compared to global peers</li>
</ul>


We anticipate a sluggish beginning to the fiscal year with 1Q8/24 earnings reflecting slower growth in Japan, China, and Southeast Asia.
Our forecast for 1Q24 operating profit stands at ¥130 billion, slightly below the consensus estimate of ¥138 billion. Assuming our estimates are accurate, we anticipate a slightly negative share-price reaction.
Our bearish stance on the stock persists, driven by the fact that it trades at a premium to our DCF and at a premium compared to global peers


Fast Retailing (9983) | Q1 Preview - Slight Miss

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

<ul>
<li>Uniqlo is such a mainstay of Japanese retailing, and indeed life, that its dominance seems inevitable and unchanging. </li>
<li>Yet it has morphed from a mess of poorly judged acquisitions and failed overseas experiments into Japan’s biggest retail export – and still manages to pull off 20% growth.</li>
<li>Its latest target of ¥10 trillion in 10 years is far-fetched but its history of persistent determination suggests continued expansion is a certainty.</li>
</ul>


Uniqlo is such a mainstay of Japanese retailing, and indeed life, that its dominance seems inevitable and unchanging. 
Yet it has morphed from a mess of poorly judged acquisitions and failed overseas experiments into Japan’s biggest retail export – and still manages to pull off 20% growth.
Its latest target of ¥10 trillion in 10 years is far-fetched but its history of persistent determination suggests continued expansion is a certainty.


Fast Retailing: Great Fundamentals for Uniqlo, Shame About the Share Price

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>While domestic revenues may have slowed, Uniqlo's domestic OP shows upside potential driven by gross margin growth and a gradual reduction in SG&amp;A costs.</li>
<li>Meanwhile, we expect Uniqlo’s International business OP to surpass ¥75bn, driven by a rebound in China demand  and strong momentum in South Korea, SE Asia &amp; Ocenia.</li>
<li>Thus, we see the upcoming earnings as a compelling opportunity for trading <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>.</li>
</ul>


While domestic revenues may have slowed, Uniqlo's domestic OP shows upside potential driven by gross margin growth and a gradual reduction in SG&amp;A costs.
Meanwhile, we expect Uniqlo’s International business OP to surpass ¥75bn, driven by a rebound in China demand  and strong momentum in South Korea, SE Asia &amp; Ocenia.
Thus, we see the upcoming earnings as a compelling opportunity for trading Fast Retailing (9983 JP).


<ul>
<li>The almost viral popularity of Familymart’s line of basic clothing items continues to grow and shows the real potential for convenience stores to diversify and adapt. </li>
<li>Backed by Itochu, Familymart has expanded the product range and added new, limited edition items and brand collaborations, creating a success story that Seven Eleven may find hard to emulate.</li>
<li>Lawson, however, is controlled by Mitsubishi Corp which happens to have a clothing production arm that was behind the early success of Uniqlo and Adastria.</li>
</ul>


The almost viral popularity of Familymart’s line of basic clothing items continues to grow and shows the real potential for convenience stores to diversify and adapt. 
Backed by Itochu, Familymart has expanded the product range and added new, limited edition items and brand collaborations, creating a success story that Seven Eleven may find hard to emulate.
Lawson, however, is controlled by Mitsubishi Corp which happens to have a clothing production arm that was behind the early success of Uniqlo and Adastria.


Convenience Wear: Familymart Competes with Uniqlo in Basics

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.</li>
<li>A few large placements in India, along with <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso Corp (6902 JP)</a> pricing, kept the market ticking this week.</li>
<li>In the IPO space, India saw a flurry of launches, as companies and banker try to cash-in on the market frenzy.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
A few large placements in India, along with Denso Corp (6902 JP) pricing, kept the market ticking this week.
In the IPO space, India saw a flurry of launches, as companies and banker try to cash-in on the market frenzy.


ECM Weekly (17th Dec 2023) - Toyota, Denso, Mankind, Axis, Merdeka, DOMS, India Shelter, Inox

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) | Q1 Preview - Slight Miss

Anticipating slow growth in Japan, China, and Southeast Asia, 1Q8/24 earnings are expected to be sluggish, leading to a slightly negative share...

Mark Chadwick

Fast Retailing: Earnings Preview

Uniqlo's domestic OP shows potential with margin growth and cost reduction, while international OP is expected to surpass ¥75bn due to rebounding...

Oshadhi Kumarasiri

Convenience Wear: Familymart Competes with Uniqlo in Basics

Familymart is successfully diversifying through clothing, a hit line that Seven Eleven may struggle to replicate. Lawson, backed by Mitsubishi...

Michael Causton

ECM Weekly (17th Dec 2023) - Toyota, Denso, Mankind, Axis, Merdeka, DOMS, India Shelter, Inox

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Fast Retailing (9983) | Q1 Preview - Slight Miss

​Anticipating slow growth in Japan, China, and Southeast Asia, 1Q8/24 earnings are expected to be sluggish, leading to a slightly negative share...

Mark Chadwick

Fast Retailing: Great Fundamentals for Uniqlo, Shame About the Share Price

Insights summarises Uniqlo's strong long-term fundamentals that are providing the basis for the recent results but which are often forgotten as...

Michael Causton

Fast Retailing: Earnings Preview

​Uniqlo's domestic OP shows potential with margin growth and cost reduction, while international OP is expected to surpass ¥75bn due to rebounding...

Oshadhi Kumarasiri

Convenience Wear: Familymart Competes with Uniqlo in Basics

Familymart is successfully diversifying through clothing, a hit line that Seven Eleven may struggle to replicate. Lawson, backed by Mitsubishi...

Michael Causton

ECM Weekly (17th Dec 2023) - Toyota, Denso, Mankind, Axis, Merdeka, DOMS, India Shelter, Inox

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

Anticipating slow growth in Japan, China, and Southeast Asia, 1Q8/24 earnings are expected to be sluggish, leading to a slightly negative share...

Uniqlo's domestic OP shows potential with margin growth and cost reduction, while international OP is expected to surpass ¥75bn due to rebounding...