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>It is going to be challenging for <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> to meet the 1QFY22 consensus revenue and OP, when it releases the first quarter results next week.</li>
<li>Comps were quite strong in the last year, driven by pent-up demand and consensus is expecting 1QFY22 to be marginally higher than the same period of the previous year.</li>
<li>We think there could be a substantial miss in 1QFY22, driven by lower than expected performance in Uniqlo’s Japan and Chinese businesses.</li>
</ul>


It is going to be challenging for Fast Retailing (9983 JP) to meet the 1QFY22 consensus revenue and OP, when it releases the first quarter results next week.
Comps were quite strong in the last year, driven by pent-up demand and consensus is expecting 1QFY22 to be marginally higher than the same period of the previous year.
We think there could be a substantial miss in 1QFY22, driven by lower than expected performance in Uniqlo’s Japan and Chinese businesses.


Fast Retailing: An Earnings Miss Could Be Around the Corner

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

Kioxia Holdings  / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kioxia-holdings-corp" target="_blank" data-smartkarma-citation="entities:29243:1" rel="noopener">Kioxia Holdings (6600 JP)</a> is aiming to raise around US$700m (including over-allocation) from its Japan IPO</li>
<li>It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.</li>
<li>In this note, we talk about the positive aspects of the deal.</li>
</ul>



Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO
It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
In this note, we talk about the positive aspects of the deal.


Kioxoa Pre-IPO - The Positives - Among the Leaders in Its Space

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 (NKY INDEX)</a> September rebalance ends in July. There could be three changes at the rebalance with sector balance in focus for the additions.</li>
<li>Depending on the changes, passive trackers will need to buy between 5-16x ADV (10.1%-24% of real float) on the inclusions and sell between 4-42x 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 (9983 JP)</a> will be capped to 10% of the index weight while <a href="https://www.smartkarma.com/entities/tokyo-electron-ltd" target="_blank" data-smartkarma-citation="entities:280:1" rel="noopener">Tokyo Electron (8035 JP)</a> is also close to the 10% cap.</li>
</ul>


The review period for the Nikkei 225 (NKY INDEX) September rebalance ends in July. There could be three changes at the rebalance with sector balance in focus for the additions.
Depending on the changes, passive trackers will need to buy between 5-16x ADV (10.1%-24% of real float) on the inclusions and sell between 4-42x ADV on the deletions.

Fast Retailing (9983 JP) will be capped to 10% of the index weight while Tokyo Electron (8035 JP) is also close to the 10% cap.


Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes

Japan Specialist

Mark Chadwick

<ul>
<li>Fast Retail missed analyst estimates for Q2 sales and operating profit. Revenue growth slowed to 5% YoY</li>
<li>Full year operating profit guidance maintained at Y450 billion, just slightly below the street </li>
<li>The stock is trading at 27x EV/EBIT, in-line with historical averages, but still expensive in absolute terms and versus global peers</li>
</ul>


Fast Retail missed analyst estimates for Q2 sales and operating profit. Revenue growth slowed to 5% YoY
Full year operating profit guidance maintained at Y450 billion, just slightly below the street 
The stock is trading at 27x EV/EBIT, in-line with historical averages, but still expensive in absolute terms and versus global peers


<ul>
<li>While domestic revenues may have slowed, Uniqlo's domestic OP shows upside potential driven by upside to GM and a gradual reduction in SG&amp;A expenditure.</li>
<li>Simultaneously, Uniqlo International is exhibiting strong performance, with anticipated revenue and OP growth of 21% and 30% YoY respectively.</li>
<li>Despite expecting a strong earnings beat, concerns over high valuations and index issues make us cautious about 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> in the current earnings cycle.</li>
</ul>


While domestic revenues may have slowed, Uniqlo's domestic OP shows upside potential driven by upside to GM and a gradual reduction in SG&amp;A expenditure.
Simultaneously, Uniqlo International is exhibiting strong performance, with anticipated revenue and OP growth of 21% and 30% YoY respectively.
Despite expecting a strong earnings beat, concerns over high valuations and index issues make us cautious about trading Fast Retailing (9983 JP) in the current earnings cycle.


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: An Earnings Miss Could Be Around the Corner

It is going to be challenging for Fast Retailing (9983 JP) to meet the 1QFY22 consensus revenue and OP, when it releases the first quarter results...

Oshadhi Kumarasiri

Kioxoa Pre-IPO - The Positives - Among the Leaders in Its Space

Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO. In this note, we talk about the...

Sumeet Singh

Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes

There could be 3 changes for the NKY in September with sector balance determining the inclusions. Fast Retailing will be capped while Tokyo...

Brian Freitas

Fast Retailing(9983) | Not So Fast

Fast Retailer's Q2 sales and operating profit fell short of analyst estimates, with revenue growth slowing to 5% YoY. The stock is trading at a...

Mark Chadwick

Fast Retailing: Earnings Preview

Despite expecting a strong earnings beat, concerns over high valuations and index issues make us cautious about trading Fast Retailing in the...

Oshadhi Kumarasiri

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Fast Retailing: An Earnings Miss Could Be Around the Corner

It is going to be challenging for Fast Retailing (9983 JP) to meet the 1QFY22 consensus revenue and OP, when it releases the first quarter results...

Oshadhi Kumarasiri

Kioxoa Pre-IPO - The Positives - Among the Leaders in Its Space

Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO. In this note, we talk about the...

Sumeet Singh

Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes

There could be 3 changes for the NKY in September with sector balance determining the inclusions. Fast Retailing will be capped while Tokyo...

Brian Freitas

Fast Retailing(9983) | Not So Fast

​Fast Retailer's Q2 sales and operating profit fell short of analyst estimates, with revenue growth slowing to 5% YoY. The stock is trading at a...

Mark Chadwick

Fast Retailing: Earnings Preview

Despite expecting a strong earnings beat, concerns over high valuations and index issues make us cautious about trading Fast Retailing in the...

Oshadhi Kumarasiri

Fast Retailer's Q2 sales and operating profit fell short of analyst estimates, with revenue growth slowing to 5% YoY. The stock is trading at a...