Transition-led earnings disruption
- Earnings outperformance (+19% yoy) furnished by lower return rate.
- Lower return rate prompts a decelerated gross sales growth.
- Recent market enlargement lacks of strategic viability.
- Downgrade to SELL due to low profitability prospect.
Above-consensus FY18 earnings was due to lower return rate. Nippon Sariroti (
New systematic pattern unveils on return rate and sales growth. We see idiosyncrasy between sales growth and return rate pattern vis--vis its historical pattern (fig. 1). In the last four quarters, gross sales growth tends to move in parallel with return rate unlike the past pattern that demonstrated no correlation between these variables which is particularly bad for
Strategy viability on new business plans are on absence. We are critical on
Downgrade to SELL due to degraded earnings quality. In the lights of a persisted competition, we believe
Sumber : IPS RESEARCH