Fast Retailing (9983 JT) has been flagged as one of the priority names among the Asia large cap stocks today. Indeed when we look at Japan Top 225, this top weight stock has dragged the index more than 100 points today with this stock being plunged in the past 7 days. Yesterday after market closed, we saw Fast Retailing had lowered FY OP profit guidance as well as their FY dividend guidance. A few sellside who completely missed the collapse in profits was quick to come up with a narrative:
- “Lack of any ground breaking new functionality has raised concerns that rivals have caught up with similar products in the summer range”, writes Nomura Securities chief researcher Masafumi Shoda in report
- Earnings show “fresh evidence of the pitfalls involved in selling a limited range of items in mass quantities under a single brand” writes SMBC Nikko Securitites senior analyst Kuni Kanamori in report
You can easily gather the above latest news under the News List-view of the single stock screen in Core Summary, where we have displayed the top 3 topics. In the example below, Fast Retailing’s top 3 recent topics that we should pay attention to are Technicals, Downgrade and Forecasts.
(One of the links under the News List if you are interested to read more: http://www.zerohedge.com/news/2016-04-07/asias-largest-clothing-retailer-plummets-after-slashing-guidance-third-blames-strong)
The downward price trend of Fast Retailing was opposite to the strong Yen, which is causing exchange loss for the name.
In terms of its valuation , Fast Retailing’s PE and P/Book do not look appealing in comparison to other large Japanese peers. Its profit momentum seems to be slowing.
With the falling knife signal and all RSI, Fast Stoch, Slow Stoch and Full Stoch revealing Oversold, does the stock still look optimistic or is it a good time to buy?