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 1QFY23 results were below consensus estimates with OP missing consensus by 13.2%.</li>
<li>The outlook for the rest of the year doesn’t seem too well either with Domestic profitability held back by rising wages and growth markets affected by slowing demand for apparel.</li>
<li>Even though China could emerge from COVID to boost Uniqlo’s profits, we see significant downside risk to Fast Retailing’s FY23 guidance.</li>
</ul>



Fast Retailing (9983 JP)’s 1QFY23 results were below consensus estimates with OP missing consensus by 13.2%.
The outlook for the rest of the year doesn’t seem too well either with Domestic profitability held back by rising wages and growth markets affected by slowing demand for apparel.
Even though China could emerge from COVID to boost Uniqlo’s profits, we see significant downside risk to Fast Retailing’s FY23 guidance.


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

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS:  US MLK Holidays - World markets directionless;  US Equity Futs flat; European Markets bid on Inflation peak;  BOJ decision to lead markets this week.</li>
<li>JAPAN:  NKY Futures +0.2% vs Cash ; USDJPY flat at 128.52 ; BOJ speculation dominates local headlines;  Kuroda heads to Davos = no fireworks? ;  Dec Machine Tools orders +1%YoY</li>
<li>DAILY NUGGET:  Fast Retailing and Sustainability: Set to introduce a new repair service in its domestic stores.</li>
</ul>


OVERSEAS:  US MLK Holidays - World markets directionless;  US Equity Futs flat; European Markets bid on Inflation peak;  BOJ decision to lead markets this week.
JAPAN:  NKY Futures +0.2% vs Cash ; USDJPY flat at 128.52 ; BOJ speculation dominates local headlines;  Kuroda heads to Davos = no fireworks? ;  Dec Machine Tools orders +1%YoY
DAILY NUGGET:  Fast Retailing and Sustainability: Set to introduce a new repair service in its domestic stores.


Good Morning Japan |US Off = Directionless; BOJ in Focus +2trn JGB Buying; Kuroda off to Davos

<ul>
<li>The Nikkei traded up half a percentage point this week, while the JPY strengthened 3% to Y127/$</li>
<li>US stocks (and hence global) rallied after data showed that inflation cooled in December, easing pressure on the Fed. </li>
<li>Lower inflation, interest rates, and China's reopening are providing a decent backdrop for Japanese equities</li>
</ul>


The Nikkei traded up half a percentage point this week, while the JPY strengthened 3% to Y127/$
US stocks (and hence global) rallied after data showed that inflation cooled in December, easing pressure on the Fed. 
Lower inflation, interest rates, and China's reopening are providing a decent backdrop for Japanese equities


Japan Weekly | Tokyo Electron, 7&I, Fast Retail

<ul>
<li>OVERSEAS:  CPI slows, Fed Pause narrative strengthens; Yields fall; DXY weakens; Equity rally continues; TSMC Optimism add fuel Semis</li>
<li>JAPAN: NKY Futs -1.0% vs Cash;  USDJPY ¥129.24; BOJ to end YCC narrative gather steam - Banks rally; Foreigners Selling JGBs; Earnings: Seven &amp;I beats; Fasty misses;  We are bullish</li>
<li>DAILY NUGGETS: Our meme below says it all - we leave it to the experts to breakdown the data but the evidence indicates  INFLATION DEFEATED.</li>
</ul>


OVERSEAS:  CPI slows, Fed Pause narrative strengthens; Yields fall; DXY weakens; Equity rally continues; TSMC Optimism add fuel Semis
JAPAN: NKY Futs -1.0% vs Cash;  USDJPY ¥129.24; BOJ to end YCC narrative gather steam - Banks rally; Foreigners Selling JGBs; Earnings: Seven &amp;I beats; Fasty misses;  We are bullish
DAILY NUGGETS: Our meme below says it all - we leave it to the experts to breakdown the data but the evidence indicates  INFLATION DEFEATED.


Good Morning Japan |Benign CPI; Fed Pause in the Crosshairs - Equities Extend Rally

<ul>
<li>We remain bearish on Fast Retailing given its valuation premium versus global peers</li>
<li>Q1 sales were resilient despite global cost of living issues. Profits missed on rising costs and China's Covid hangover </li>
<li>Cost pressures on the wage bill could be a multi-year issue as Uniqlo seeks to align with global pay standards</li>
</ul>


We remain bearish on Fast Retailing given its valuation premium versus global peers
Q1 sales were resilient despite global cost of living issues. Profits missed on rising costs and China's Covid hangover 
Cost pressures on the wage bill could be a multi-year issue as Uniqlo seeks to align with global pay standards


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

Although the management has kept its previous guidance unchanged, the business outlook for the rest of the year seems a bit tough with the domestic...

Oshadhi Kumarasiri

Good Morning Japan |US Off = Directionless; BOJ in Focus +2trn JGB Buying; Kuroda off to Davos

NKY Futures +0.2% vs Cash ; USDJPY flat; BOJ speculation dominates as Kuroda heads to Davos ; Dec Machine Tools +1%YoY. Global stealth rally...

Mark Chadwick

Japan Weekly | Tokyo Electron, 7&I, Fast Retail

We highlight stocks that have impacted the Japanese market this week. Overall, equities were buoyed by a softening of US inflation rates and...

Mark Chadwick

Good Morning Japan |Benign CPI; Fed Pause in the Crosshairs - Equities Extend Rally

INFLATION DEFEATED ! Fed pause next. JAPAN: NKY Futs -1.0% vs Cash; USDJPY ¥129.24; BOJ to end YCC narrative gather steam - Banks rally;...

Mark Chadwick

Fast Retailing (9983) | Q1 Miss

We remain bearish on Fast Retailing due to valuation concerns versus global peers. MRQ results showed top line strength but cost pressures hit the...

Mark Chadwick

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