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>
<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 share price rose 10% towards the top end of the trend channel since reporting 15.8% YoY same-store sales growth in April 2022.</li>
<li>However, the growth rate was influenced by weak comps and in April 2022 domestic revenue was 9% below the pre-pandemic level.</li>
<li>Meanwhile, Uniqlo’s growth drivers are faltering with China’s revenue near pandemic lows and North America, Europe and Asia affected by rising inflation.</li>
</ul>



Fast Retailing (9983 JP)’s share price rose 10% towards the top end of the trend channel since reporting 15.8% YoY same-store sales growth in April 2022.
However, the growth rate was influenced by weak comps and in April 2022 domestic revenue was 9% below the pre-pandemic level.
Meanwhile, Uniqlo’s growth drivers are faltering with China’s revenue near pandemic lows and North America, Europe and Asia affected by rising inflation.


Fast Retailing: China Near Pandemic Lows and America, Europe and Asia Affected by Rising Inflation

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

Life Insurance  of India / Equity Capital Markets

<ul>
<li>Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.</li>
<li>On the IPOs front, LIC's anchor book wasn't great while Delhivery finally launched its IPO and Hong Kong market saw its first launch in a while.</li>
<li>Placements remained few and far between with only <a href="https://www.smartkarma.com/entities/air-new-zealand-ltd" target="_blank" data-smartkarma-citation="entities:815:1" rel="noopener">Air New Zealand (AIR NZ)</a> launching its shortfall bookbuild.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPOs front, LIC's anchor book wasn't great while Delhivery finally launched its IPO and Hong Kong market saw its first launch in a while.
Placements remained few and far between with only Air New Zealand (AIR NZ) launching its shortfall bookbuild.


ECM Weekly (9th May 22) - LIC, Campus, Rainbow, Delhivery, Shieldus, Yunkang, PAG, Keep, Air NZ

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

Quantitative Analysis

<ul>
<li>We look at short interest across Hong Kong, Japan, Korea and Taiwan in April to identify stocks/sectors that have seen the largest changes in each market.</li>
<li>Korea and Taiwan are showing a clear divergence with short notional increasing as the market moves lower, indicative of new shorts being initiated.</li>
<li>
<a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a> has seen the largest short covering as the stock has tumbled in the last couple of weeks.</li>
</ul>


We look at short interest across Hong Kong, Japan, Korea and Taiwan in April to identify stocks/sectors that have seen the largest changes in each market.
Korea and Taiwan are showing a clear divergence with short notional increasing as the market moves lower, indicative of new shorts being initiated.

China Merchants Bank H (3968 HK) has seen the largest short covering as the stock has tumbled in the last couple of weeks.


Asia Short Interest: Large Moves in April

<ul>
<li>Even though 2QFY22 results were broadly in line with consensus, <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 share price rose 8.8% as markets expected the worst amidst the Russian controversy and Shanghai lockdowns.</li>
<li>However, this price movement seems unwarranted given the impact of Shanghai lockdowns could only be seen in the 3QFY22 financial statements.</li>
<li>During earnings, FR introduced North America &amp; Europe as new growth drivers to replace the declining Chinese market. But we are not convinced that they are up to the task.</li>
</ul>


Even though 2QFY22 results were broadly in line with consensus, Fast Retailing (9983 JP)’s share price rose 8.8% as markets expected the worst amidst the Russian controversy and Shanghai lockdowns.
However, this price movement seems unwarranted given the impact of Shanghai lockdowns could only be seen in the 3QFY22 financial statements.
During earnings, FR introduced North America &amp; Europe as new growth drivers to replace the declining Chinese market. But we are not convinced that they are up to the task.


Fast Retailing: New Growth Pillar May Not Be Strong Enough to Support the Weight of Valuation

Japan Specialist

Mark Chadwick

<ul>
<li>Interim results were surprisingly strong considering the headwinds from China and rising costs</li>
<li>2H guidance looks optimistic. China remains a key risk and we still see risks to the gross margin</li>
<li>The "R" word. Rising inflation, Rising Interest rates = Recession. Probably not good for consumers and certainly not good for high stock multiples</li>
</ul>


Interim results were surprisingly strong considering the headwinds from China and rising costs
2H guidance looks optimistic. China remains a key risk and we still see risks to the gross margin
The "R" word. Rising inflation, Rising Interest rates = Recession. Probably not good for consumers and certainly not good for high stock multiples


Fast Retailing (9983) - Summer Is the Time for Shorts

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: China Near Pandemic Lows and America, Europe and Asia Affected by Rising Inflation

There could be a small improvement in YoY performance in Japan in the third quarter. However, it won’t be sufficient to offset weaknesses in...

Oshadhi Kumarasiri

ECM Weekly (9th May 22) - LIC, Campus, Rainbow, Delhivery, Shieldus, Yunkang, PAG, Keep, Air NZ

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

Asia Short Interest: Large Moves in April

Short notional in Korea and Taiwan has been increasing as the market has been moving lower. Shorts on China Merchant Bank have been covered in...

Brian Freitas

Fast Retailing: New Growth Pillar May Not Be Strong Enough to Support the Weight of Valuation

Fast Retailing introduced North America & Europe as new growth drivers to replace the declining Chinese market. But we are not convinced that they...

Oshadhi Kumarasiri

Fast Retailing (9983) - Summer Is the Time for Shorts

The "R" word. Rising inflation, Rising Interest rates => Recession. Really not good for consumers and probably not good for high stock multiples

Mark Chadwick

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