The Fast Retailing (9983) Selldown Conundrum - Not Now, But Soon... Then For A Long Time

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

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Fast Retailing: Growth Markets Look Weak & Uniqlo Japan Profitability Affected By Rising Wages

Fast Retailing: Japan Demand Not Enough to Warrant an Upside, Downside Risks Looming on The Horizon

Gravity Works As WeWork Doesn't; Now Plan B

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.

Equity Bottom-Up

<ul>
<li>Consensus FY+2 EBIT seems inflated by around 16%, driven by optimistic assumptions of recovery in China and growth in North America and Europe.</li>
<li>However, apparel demand in China was lower than expected, while wage hikes and a potential US recession could negatively impact profitability in the short-medium term.</li>
<li>As risks are skewed to the downside, we remain short <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> leading up to 2QFY23 results.</li>
</ul>


Consensus FY+2 EBIT seems inflated by around 16%, driven by optimistic assumptions of recovery in China and growth in North America and Europe.
However, apparel demand in China was lower than expected, while wage hikes and a potential US recession could negatively impact profitability in the short-medium term.
As risks are skewed to the downside, we remain short Fast Retailing (9983 JP) leading up to 2QFY23 results.


Fast Retailing: Inflated Earnings Expectations & Stretched Multiples, A Cause for Concern