Fast Retailing

DCF to market -50.4% (tolerance 15.0%). the steady state after FY2037 (Market inputs: Terminal growth 1.9 per cent and RONIC 30 per cent), the overseas build-out ending in the ten-year fade: The DCF's equity value is 50.4 per cent below the market capitalisation, beyond the 15 per cent tolerance. The market's enterprise value at the valuation date, 22.6 trillion yen, is 2.21 times the DCF's 10.2 trillion; with the window unchanged, the continuing value at FY2037 would have to be 41.2 trillion rather than 13.1. At the model's WACC of 8.50 per cent and RONIC of 30 per cent, that takes growth after FY2037 of about 6.7 per cent a year rather than 1.9: the market prices the store openings and the overseas sales-per-store gains running on for decades beyond the fade. On the steady-state

Residual income to market -49.8% (tolerance 15.0%). residual income's steady state after FY2037 (Market inputs: Long-run nominal GDP growth 1.9 per cent): Residual income's equity value is 49.8 per cent below the market capitalisation, beyond the 15 per cent tolerance. After the invested capital and the window's residual operating income, the market's enterprise value leaves a continuing value at FY2037 of 39.0 trillion yen against the model's 11.3 trillion. At the model's WACC of 8.50 per cent, that means residual operating income growing about 6.5 per cent a year after FY2037 (Market-implied growth) rather than at the 1.9 per cent long-run nominal GDP growth; that growth rate would close it. Beside the record: revenue grew 8.3 per cent a year