Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Japanese and Asian equity long/short strategies

Uzabase

Specialising in Japanese and Asian equity long/short strategies with a focus on rigorous, but targeted quantitative analysis to temper evaluations of company strategy, potential and vision. At Uzabase, our team of analysts provides coverage of industry dynamics with a local Asian flavour on Speeda, our financial information platform. Going forward we are aiming to channel our focus toward thematic research on emerging industries and company research.

Equity Bottom-Up

<p>We fine tune our earnings estimates in anticipation of 1Q earnings and find that even with conservative assumptions FY earnings are likely to beat company guidance and consensus by 12% and 10% respectively. Our base case estimate is FY OP of JPY40bn, 25% above company guidance. Gross margins and certain aspects of SG&amp;A have displayed consistent trends over the company's history. Thus, variance in the OP trend has tended to be a result of fluctuations in revenue or transaction value growth rates and promotional expenses.</p><div class="content-caption"><strong>Our Fitted Gross Profit Model Performs Well</strong></div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/030/596/original/Modeled%20Fit.png?1501211183" class="editor-image img-responsive" data-smartkarma-image-id="30596"></figure><div style="text-align: left;" class="content-caption">Source: Company Disclosures, Author Estimates</div>

We fine tune our earnings estimates in anticipation of 1Q earnings and find that even with conservative assumptions FY earnings are likely to beat company guidance and consensus by 12% and 10% respectively. Our base case estimate is FY OP of JPY40bn, 25% above company guidance. Gross margins and certain aspects of SG&amp;A have displayed consistent trends over the company's history. Thus, variance in the OP trend has tended to be a result of fluctuations in revenue or transaction value growth rates and promotional expenses.Our Fitted Gross Profit Model Performs WellSource: Company Disclosures, Author Estimates

Start Today: We Expect 50% YoY OP Growth This FY; Significant Deceleration Likely Over a Year Away

Director, Pearl Hill Advisors

Nicholas Tanner

Director

Pearl Hill Advisors

<p>United Arrows operates some 361 fashion outlets in Japan.  44% of sales are ladies, 30% men’s wear and 10% accessories. Average spend at “United Arrows” is Y20,000.</p><p>First half sales rose 2% to Y65.1bn but operating profit fell 53% to Y1.7bn. The full year operating profit forecast was revised down from Y11.3bn to Y9.1bn (-18%). This is now said to be conservative. First half numbers were worse than expected as existing store sales fell 0.1% vs. the forecast growth of 3.8%. If there was any good…</p>

United Arrows operates some 361 fashion outlets in Japan.  44% of sales are ladies, 30% men’s wear and 10% accessories. Average spend at “United Arrows” is Y20,000.First half sales rose 2% to Y65.1bn but operating profit fell 53% to Y1.7bn. The full year operating profit forecast was revised down from Y11.3bn to Y9.1bn (-18%). This is now said to be conservative. First half numbers were worse than expected as existing store sales fell 0.1% vs. the forecast growth of 3.8%. If there was any good…

Not Overly Expensive on 14x and They Yield 2.7%.

Japan

UNITED ARROWS LTD., operates fashion stores, specializing in casual clothing and accessory for men and women.  The Company has stores nationwide.  Main forces are United Arrows, Green Label Relaxing and Chrome Hearts.

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United Arrows (7606 JP)

Start Today: We Expect 50% YoY OP Growth This FY; Significant Deceleration Likely Over a Year Away

We fine tune our earnings estimates in anticipation of 1Q earnings and find that even with conservative assumptions FY earnings are likely to beat...

Mio Kato

Not Overly Expensive on 14x and They Yield 2.7%.

United Arrows operates some 361 fashion outlets in Japan. 44% of sales are ladies, 30% men’s wear and 10% accessories. Average spend at “United...

Pearl Hill Advisors

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