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>Although we are not expecting a major miss 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> in FQ4, we believe FY23 guidance could be disappointing to prompt a substantial correction in FY23 consensus.</li>
<li>China is continuously failing to live up to the company’s expectations and the only factors holding Uniqlo’s share price from breaking-down are the North America growth and the Yen depreciation.</li>
<li>Those too are now under threat, with a looming recession and Fed rate hikes failing to curb inflation.</li>
</ul>


Although we are not expecting a major miss for Fast Retailing (9983 JP) in FQ4, we believe FY23 guidance could be disappointing to prompt a substantial correction in FY23 consensus.
China is continuously failing to live up to the company’s expectations and the only factors holding Uniqlo’s share price from breaking-down are the North America growth and the Yen depreciation.
Those too are now under threat, with a looming recession and Fed rate hikes failing to curb inflation.


Fast Retailing – FY23 Guidance Could Knock Some Sense into Market

Japan Specialist

Mark Chadwick

<ul>
<li>Fast Retailing's share price has risen 24% year-to-date, outperforming the index and global peers</li>
<li>The share price has been driven by multiple expansion, which we believe is now at risk of reversing</li>
<li>With an uncertain economic backdrop, we believe management may issue conservative guidance for the next fiscal year. We turn Bearish.</li>
</ul>


Fast Retailing's share price has risen 24% year-to-date, outperforming the index and global peers
The share price has been driven by multiple expansion, which we believe is now at risk of reversing
With an uncertain economic backdrop, we believe management may issue conservative guidance for the next fiscal year. We turn Bearish.


Fast Retailing (9983) | Elevated Multiple and Guidance Risk

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>A few years back, <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> announced its intention to aggressively grow its consumer brand business. </li>
<li>It has just confirmed deals with Eddie Bauer and Barbour after a year in which it also signed Reebok and Under Armour.</li>
<li>Although a small part of the Itochu empire, the consumer brand business, alongside retail interests such as Familymart, are key to the trading firm's longer term profits.</li>
</ul>


A few years back, Itochu Corp (8001 JP) announced its intention to aggressively grow its consumer brand business. 
It has just confirmed deals with Eddie Bauer and Barbour after a year in which it also signed Reebok and Under Armour.
Although a small part of the Itochu empire, the consumer brand business, alongside retail interests such as Familymart, are key to the trading firm's longer term profits.


<ul>
<li>Last week, The UNHR Office published a carefully worded report saying that the actions of the Chinese Government in Xinjiang “may constitute international crimes, in particular, crimes against humanity”.</li>
<li>Meanwhile, apparel brands in the US seem to be exploiting loopholes in the Uygur Forced Labour Prevention Act with Xinjiang’s clothing exports rising to a 2-year high in July 2022.</li>
<li>With pressure mounting on US customs to increase oversight, <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>’s newest growth pillar (the US) could be about to meet major setbacks in the near term.</li>
</ul>


Last week, The UNHR Office published a carefully worded report saying that the actions of the Chinese Government in Xinjiang “may constitute international crimes, in particular, crimes against humanity”.
Meanwhile, apparel brands in the US seem to be exploiting loopholes in the Uygur Forced Labour Prevention Act with Xinjiang’s clothing exports rising to a 2-year high in July 2022.
With pressure mounting on US customs to increase oversight, Fast Retailing (9983 JP)’s newest growth pillar (the US) could be about to meet major setbacks in the near term.


Fast Retailing – Downside Risk Mounts as Xinjiang Cotton Controversy Takes Centre Stage Yet Again

<ul>
<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>  has rallied 60% during the last three-months on better-than-expected Q3 performance and a relatively strong bounce in Topix exceeding the upper-end of the trend-channel by 3%.</li>
<li>Although 20% below the all-time high, reached during the COVID pandemic, the Fast Retailing to Topix  ratio is currently near the pre-COVID peak and starting to show some resistance.</li>
<li>We would look to short Fast Retailing  with expectations of weakness in overseas markets such as North America and Europe in addition to the already struggling Chinese market.</li>
</ul>



Fast Retailing (9983 JP)  has rallied 60% during the last three-months on better-than-expected Q3 performance and a relatively strong bounce in Topix exceeding the upper-end of the trend-channel by 3%.
Although 20% below the all-time high, reached during the COVID pandemic, the Fast Retailing to Topix  ratio is currently near the pre-COVID peak and starting to show some resistance.
We would look to short Fast Retailing  with expectations of weakness in overseas markets such as North America and Europe in addition to the already struggling Chinese market.


Fast Retailing: The Fast Retailing to Topix Ratio Hitting Resistance Near The Pre-COVID Peak

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
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Dividend (Yield)	0.00

Fast Retailing (9983 JP)

Fast Retailing – FY23 Guidance Could Knock Some Sense into Market

The US apparel industry is faced with a threat of a recession and the USD is likely to fall from a 20-year high with a pause on rate hikes. Thus,...

Oshadhi Kumarasiri

Fast Retailing (9983) | Elevated Multiple and Guidance Risk

Fast Retailing is trading at an excessive valuation premium to the broader index and global peers. Given the rising interest rate environment we...

Mark Chadwick

Itochu Grabs Eddie Bauer and Barbour

Itochu Corp has become a major player in brand distribution in the last decade but is now aggressively acquiring brand rights to cement its...

Michael Causton

Fast Retailing – Downside Risk Mounts as Xinjiang Cotton Controversy Takes Centre Stage Yet Again

As the US increases its border restrictions to prevent the entry of Xinjiang cotton, Uniqlo’s China heavy supply chain could act as a major...

Oshadhi Kumarasiri

Fast Retailing: The Fast Retailing to Topix Ratio Hitting Resistance Near The Pre-COVID Peak

With the Fast Retailing to Topix ratio hitting resistance at around 44.0x, we would look to short Fast Retailing in anticipation of a 28% downside...

Oshadhi Kumarasiri

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