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Leading Independent Investment Research, Morningstar, Inc.

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Equity Bottom-Up

<ul><li>Fast Retailing&rsquo;s fiscal 2015 fourth-quarter results and 2016 profit guidance were disappointing, but the impact from reduced earnings expectations to our fair value estimate is minimal as we lift our mid-term assumptions for new-store expansion.</li><li>Our revised fair value estimate of JPY 31,000 (down from JPY 32,271) implies a price/earnings ratio of 25.8 times. We think the company remains overvalued at the current share price, with ample growth factored in.</li><li>We retain our view that Fast Retailing has no economic moat. Although the firm holds a leading position in the global fast-fashion apparel market, we believe it lacks sufficient scale or a globally recognised brand that might offer it any sustainable competitive advantage in the highly commodified apparel retail market.</li></ul>Analysts:&nbsp;Dan Baker &amp;&nbsp;Chelsey Tam&nbsp;Full report below the fold...

Fast Retailing&rsquo;s fiscal 2015 fourth-quarter results and 2016 profit guidance were disappointing, but the impact from reduced earnings expectations to our fair value estimate is minimal as we lift our mid-term assumptions for new-store expansion.Our revised fair value estimate of JPY 31,000 (down from JPY 32,271) implies a price/earnings ratio of 25.8 times. We think the company remains overvalued at the current share price, with ample growth factored in.We retain our view that Fast Retailing has no economic moat. Although the firm holds a leading position in the global fast-fashion apparel market, we believe it lacks sufficient scale or a globally recognised brand that might offer it any sustainable competitive advantage in the highly commodified apparel retail market.Analysts:&nbsp;Dan Baker &amp;&nbsp;Chelsey Tam&nbsp;Full report below the fold...

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