Consumer: Fast Retailing, Selamat Sempurna, Can Do Co Ltd, Ace Hardware Indonesia, Koshidaka Holdings and more

• Fast Retailing (9983 JP)’s share price is up 10% after beating 1QFY22 consensus revenue and OP by 1.4% and 20.6% respectively.
• However, the share price move feels unwarranted given that the beat was driven by mostly one-off/temporary factors in the company’s less significant segments
• We think this is an opportunity to short Fast Retailing as Uniqlo seems to be slowing rapidly in the Chinese market.

• The company’s main product, filers, are no longer key features in Electric Vehicles thus earnings will be pressured. 
• Venture into air-purifying business is commendable yet it may not plug the hole immediately.
• Foreign investors in the company are mainly looking for exposure in the auto-related business, so the change into air purifier may cause them to sell. 

• On January 14, I attended a business strategy briefing of CanDo. This was the first business briefing after AEON (8267) consolidated CanDo.
• While CanDo’s sales are expected to increase mainly through consignment sales, profit margin will improve due to cost reduction, and the key will be to expand sales of attractive products.
• Since the management framework has changed by joining AEON, the corporate governance will be paid attention whether this change will be good for the sustainable growth of the corporate value.

4Q21F preview: Q

• 1Q (Sep-Nov) sales of 6.371bn yen, 37% of the company’s 1H guidance, may seem low at first glance, but were above the company’s target for the 1Q
• 1Q OP of -1.130bn yen was around 0.9bn yen above the company’s 1Q forecast. The company had expected a loss of nearly 2bn yen for 1Q
• 1Q RP of -196m yen includes 936m yen in subsidy income. The company’s policy is to book subsidy income on a payment basis