In today’s briefing:
- Fast Retailing: Q1 Beat Seems Temporary but Concerns About China Could Last Long
- Paramount Bed (7817 JP): Poised to Grow on the Back of Recovery from the COVID-19
- Japan’s Governance: Hitachi Construction Machinery (6305): Extraordinary Briefing Session
- Japan’s Governance: CanDo (2698) Business Strategy Meeting
- Koshidaka Holdings (2157): Takeaways from Our Post-Earnings Interview
Fast Retailing: Q1 Beat Seems Temporary but Concerns About China Could Last Long
- Fast Retailing (9983 JP)’s share price is up 10% after beating 1QFY22 consensus revenue and OP by 1.4% and 20.6% respectively.
- However, the share price move feels unwarranted given that the beat was driven by mostly one-off/temporary factors in the company’s less significant segments
- We think this is an opportunity to short Fast Retailing as Uniqlo seems to be slowing rapidly in the Chinese market.
Paramount Bed (7817 JP): Poised to Grow on the Back of Recovery from the COVID-19
- Paramount Bed Holdings Co Lt (7817 JP) reported record-high sales and profit during six-month ended on September 30, 2021, driven by strong domestic demand due to recovery from the pandemic.
- Each of businesses are receiving steady inquiries from market and is expected to perform strongly. Management raised full-year guidance after a strong Q1 results.
- New products are driving margin for the company. Nemuri SCAN continues to perform well as remote monitoring using sensor technology is receiving more attention amid the COVID-19 pandemic.
Japan’s Governance: Hitachi Construction Machinery (6305): Extraordinary Briefing Session
- I attended an extraordinary briefing on Hitachi Construction Machinery and would like to update and discuss further in this report.
- Maxell (6810) is a good case study of a subsidiary whose shares were transferred by Hitachi. Partners are important for HCM because of the competitive environment.
- The share price is expected to return to that range of 3,300 yen for the time being which is the fair value as a result of the due diligence.
Japan’s Governance: CanDo (2698) Business Strategy Meeting
- On January 14, I attended a business strategy briefing of CanDo. This was the first business briefing after AEON (8267) consolidated CanDo.
- While CanDo’s sales are expected to increase mainly through consignment sales, profit margin will improve due to cost reduction, and the key will be to expand sales of attractive products.
- Since the management framework has changed by joining AEON, the corporate governance will be paid attention whether this change will be good for the sustainable growth of the corporate value.
Koshidaka Holdings (2157): Takeaways from Our Post-Earnings Interview
- 1Q (Sep-Nov) sales of 6.371bn yen, 37% of the company’s 1H guidance, may seem low at first glance, but were above the company’s target for the 1Q
- 1Q OP of -1.130bn yen was around 0.9bn yen above the company’s 1Q forecast. The company had expected a loss of nearly 2bn yen for 1Q
- 1Q RP of -196m yen includes 936m yen in subsidy income. The company’s policy is to book subsidy income on a payment basis
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