20221227-瑞士信贷集团-Nitori_Holdings-Forecast_change_Competitive_advantage_intact_10页_676kb

Nitori Holdings Summary

Core Content

Nitori Holdings is a leading Japanese furniture retailer that has been updating its financial forecasts in response to the 3Q FY3/23 results. The company is focusing on increasing its domestic market share and expanding overseas operations, particularly in Greater China and Southeast Asia.

Main Points

• Target Price: Updated to ¥16,500 from ¥15,900, reflecting a potential return of -0.9%.
• Rating: Maintained as Neutral, based on a comparison of 12-month forward total return with the coverage universe.
• Forecast Change: Adjustments to forecasts for FY3/23 and FY3/24 primarily reflect changes in FX assumptions. Operating profit is forecasted at ¥132.9bn for FY3/23 (up from ¥129.7bn) and ¥122.7bn for FY3/24 (up from ¥106.6bn).
• Same-Store Sales: Domestic same-store sales are expected to rise from 0% YoY in FY3/23 to +0.4% (vs. guidance of +2.6%), while remaining flat in FY3/24.
• Financial Metrics:
  • Sales are projected to grow from ¥811.6bn in FY2/22 to ¥924.0bn in FY3/23, with a slight decline in FY3/24 to ¥897.6bn.
  • Operating profit is expected to decrease in FY3/23 and FY3/24, with a recovery in FY3/25.
  • Net income is forecasted to be ¥92.8bn in FY3/23, with a decline in FY3/24 to ¥85.5bn, followed by a slight increase in FY3/25.
• Valuation:
  • The company uses a residual income model for target price calculation.
  • The cost of equity is assumed at 4.9%, with a terminal growth rate of 1.0%.
  • The target price of ¥16,500 is based on five-year earnings forecasts and a 1.0% terminal growth rate.
• Risks:
  • Downside risks include management changes, earnings deterioration from M&A, and increased sourcing costs.
  • Upside risks include higher-than-expected performance in China and enhanced shareholder returns.

Key Information

Financial Forecasts

Forecast Scenarios

• Blue Sky Scenario: Assumes a gross margin of 55.2% in FY3/27, on par with FY2/20, leading to a target price of ¥18,500.
• Grey Sky Scenario: Assumes a gross margin of 48.0% in FY3/27, leading to a target price of ¥11,500.

Share Price Performance

Balance Sheet Highlights

• Cash & Cash Equivalents: Decreased from ¥130.4bn in FY2/22 to ¥91.6bn in FY3/23, with a slight increase in FY3/24 to ¥99.9bn.
• Total Assets: Expected to grow from ¥983.8bn in FY2/22 to ¥1,148.2bn in FY3/25.
• Total Liabilities: Projected to decrease from ¥251.0bn in FY2/22 to ¥209.6bn in FY3/25.
• Shareholders’ Equity: Expected to increase from ¥725.2bn in FY2/22 to ¥930.9bn in FY3/25.

Store Expansion and Sales Growth

• Domestic Stores: Projected to grow from 634 stores in FY2/22 to 947 stores in FY3/27.
• Overseas Stores: Expected to increase from 92 stores in FY2/22 to 277 stores in FY3/27.
• China Stores: From 2 to 203 stores by FY3/27.
• Online Sales: Projected to grow significantly, with an increase from ¥70,500m in FY2/22 to ¥118,400m in FY3/27.

Strategic Focus

• Nitori continues to leverage its private-brand strategy to expand both online and physical store networks.
• The company is looking to enhance shareholder returns through M&A and its strong financial position.
• The Nitori store format in Japan is becoming a stable cash cow, with new formats expected to drive long-term growth.
• Greater China and Southeast Asia are highlighted as key growth regions.

Conclusion

Nitori Holdings is maintaining its Neutral rating, with a revised target price of ¥16,500. The company's strategy to expand both domestically and internationally, supported by its private-brand approach and financial strength, is expected to drive long-term growth. However, risks such as management changes and increased sourcing costs remain. The company's financial performance and valuation metrics suggest a mixed outlook with potential upside in certain regions and risks in others.