Daily Brief Japan: Fast Retailing, TSE Tokyo Price Index TOPIX, SBI Holdings and more

In today’s briefing:

FAST RETAIL (9983) | 3 Reasons Why Guidance Could Miss
Policy Shareholdings, if Reduced, Should Be Used for Profitable Investments
SBI Holdings – Pages of Affiliates | Strong Securities | Banks Doing Well | Accelerating Profit

FAST RETAIL (9983) | 3 Reasons Why Guidance Could Miss

Fast Retail Full-Year Expectations: Anticipate strong FY results, but potential FY8/24 guidance headwinds include weather impacts and yen weakness.
Management Guidance Risks: The key risk would seem to be China outlook; Japan/Europe’s heatwave impact on fall season; potential for gross margin pressures.
Valuation: Despite growth prospects, concerns over cyclicality and valuation relative to peers persist.

TSE market reorganization triggered the reduction of policy shareholdings, and now the test will be whether policy shareholdings can be reduced in order to raise ROE, which is sluggishly growing.
Companies that maintain excessive policy shareholdings should provide a rational explanation of their holding policies and the reasons for each shareholding in their corporate governance reports and annual securities reports.
Improving OP Margin, which is highly correlated with ROE, is a shortcut to raising ROE. Policy shareholdings, should not be accumulated in cash on hand, but used for profitable investments.

SBI Holdings (8473 JP) may not be the easiest company to analyze with its many pages of affiliates, but at the least, it’s profit momentum is strong.
Securities Group profit is key to the company where growth is excellent in earnings and in the number of new accounts, across many businesses.
Its two banks in Japan are doing well, growing faster than others, but still SBI Holdings (8473 JP) is more of an alternative financial company to a traditional bank.

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