Fast Retailing Is Becoming a Global Brand, but Will Struggle to Compete with Its Global Rivals

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Takeaways From Meeting With Fast Retailing Management; Long-Term Thesis Intact

No-Moat Fast Retailing Fiscal 2015 Below Expectations; Fair Value Estimate Cut 4% to JPY 31,000

Fast Retailing is Becoming a Global Brand, but will Struggle to Compete with its Global Rivals.

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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Equity Bottom-Up

We left the meeting with Fast Retailing with a more positive outlook on the company’s strategy. We think management is quick to adapt to changes in the market, as exemplified by improved sales and effective cost cutting measures at Uniqlo Japan in the third quarter (ended May 2016).We maintain our fair value estimate at JPY 27,000 per share, which translates to a prospective price/earnings ratio of 31 times. The shares are overvalued, in our view.Analyst: Chelsey Tam

We left the meeting with Fast Retailing with a more positive outlook on the company’s strategy. We think management is quick to adapt to changes in the market, as exemplified by improved sales and effective cost cutting measures at Uniqlo Japan in the third quarter (ended May 2016).We maintain our fair value estimate at JPY 27,000 per share, which translates to a prospective price/earnings ratio of 31 times. The shares are overvalued, in our view.Analyst: Chelsey Tam

Fast Retailing Shares Expensive, Despite More Positive Outlook for Uniqlo Japan