Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>
 Cautious but Credible – FY25 guidance underwhelms, but Shimano’s realism is justified. The bike market is recovering, even if 2025 will be a grind.</li>
<li>
 Sitting on a Cash Pile – ¥530 billion in net financial assets, yet capital returns remain restrained. Investors will be watching for bolder moves.</li>
<li>
 Quality Wins – mid-cycle ROIC north of 20% and end-market inventories normalising - a long-term winner at a fair price.</li>
</ul>



 Cautious but Credible – FY25 guidance underwhelms, but Shimano’s realism is justified. The bike market is recovering, even if 2025 will be a grind.

 Sitting on a Cash Pile – ¥530 billion in net financial assets, yet capital returns remain restrained. Investors will be watching for bolder moves.

 Quality Wins – mid-cycle ROIC north of 20% and end-market inventories normalising - a long-term winner at a fair price.


Shimano (7309) | A Slow but Steady Ascent

<ul>
<li>
Q4 Risks Remain: Market conditions deteriorated in late 2024, and key data points suggest a potential miss on Q4 earnings expectations.</li>
<li>
Focus on 2025 Outlook: Investors should shift attention to Shimano’s guidance, capital allocation strategy, and potential shareholder return initiatives in the coming year.</li>
<li>
Long-Term Value: Despite short-term uncertainties, Shimano's strong fundamentals and disciplined strategy position it well for sustainable growth and high returns.</li>
</ul>



Q4 Risks Remain: Market conditions deteriorated in late 2024, and key data points suggest a potential miss on Q4 earnings expectations.

Focus on 2025 Outlook: Investors should shift attention to Shimano’s guidance, capital allocation strategy, and potential shareholder return initiatives in the coming year.

Long-Term Value: Despite short-term uncertainties, Shimano's strong fundamentals and disciplined strategy position it well for sustainable growth and high returns.


<ul>
<li>Shimano, the Japanese maker of bicycle components and fishing equipment, is in need of a strategic gear change</li>
<li>A significant -25% decline in FY23 net sales highlights Shimano’s struggles. Revenues dropped a further -11% in the first nine months of 2024</li>
<li>For investors seeking opportunity at the bottom of the cycle, Shimano presents a compelling case. The stock is trading at 2.3x book value</li>
</ul>


Shimano, the Japanese maker of bicycle components and fishing equipment, is in need of a strategic gear change
A significant -25% decline in FY23 net sales highlights Shimano’s struggles. Revenues dropped a further -11% in the first nine months of 2024
For investors seeking opportunity at the bottom of the cycle, Shimano presents a compelling case. The stock is trading at 2.3x book value


Shimano: An Opportunity for Activist Investors

<ul>
<li>Bike Sales Recovery: Shimano’s bike component sales grew 8% year-on-year in Q3, confirming the market has stabilized after six quarters of decline.2. 3. </li>
<li>China Drives Growth: China’s share of Shimano’s bike sales surged to 31% in 1H24, with management projecting strong growth of 30% YoY in 2H.</li>
<li>Improving Profitability: The bike segment’s operating margin rose to 18.6% in Q3, reflecting a strong recovery from last year's lows, with potential for further improvement.</li>
</ul>


Bike Sales Recovery: Shimano’s bike component sales grew 8% year-on-year in Q3, confirming the market has stabilized after six quarters of decline.2. 3. 
China Drives Growth: China’s share of Shimano’s bike sales surged to 31% in 1H24, with management projecting strong growth of 30% YoY in 2H.
Improving Profitability: The bike segment’s operating margin rose to 18.6% in Q3, reflecting a strong recovery from last year's lows, with potential for further improvement.


Shimano (7309) | Bike Sales Rebound as China Fuels Growth

<ul>
<li>Shimano reported a 40% drop in operating profit for 2Q and revised down full year guidance</li>
<li>Bike sales continue to be weak (-19% YoY) in Q2 and 2H outlook is even worse</li>
<li>We expect the share price to sell-off following the guidance cut. The inventory overhang could take a while to resolve</li>
</ul>


Shimano reported a 40% drop in operating profit for 2Q and revised down full year guidance
Bike sales continue to be weak (-19% YoY) in Q2 and 2H outlook is even worse
We expect the share price to sell-off following the guidance cut. The inventory overhang could take a while to resolve


Shimano (7309) | Profit Recovery Derailed

Japan

SHIMANO INC. manufactures and sells products for bicycling, snowboarding, and fishing.  The Company's products include running gears and brake parts for bicycles and rods, reels, and tackles for fishing.  The Company manufactures golf related products as well.  Shimano mainly exports to Asia, Europe, and the United States.

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Shimano Inc (7309 JP)

Shimano (7309) | A Slow but Steady Ascent

Shimano's cautious guidance for FY25 justified by recovering bike market, strong financial position, and quality performance. Investors watching...

Mark Chadwick

Shimano (7309) | Q4 Preview and Outlook

Market conditions worsened in late 2024, raising concerns about Q4 earnings, but investors should focus on Shimano's long-term value and 2025...

Mark Chadwick

Shimano: An Opportunity for Activist Investors

Shimano faces challenges with declining sales, but presents a potential opportunity for investors with its low stock valuation.

Mark Chadwick

Shimano (7309) | Bike Sales Rebound as China Fuels Growth

Shimano's bike sales rebound with 8% growth in Q3, driven by China's surge to 31% share and improved profitability with operating margin at 18.6%.

Mark Chadwick

Shimano (7309) | Profit Recovery Derailed

We expect the share price to sell-off following the guidance cut. The inventory overhang could take a while to resolve given weak bike sales in Europe

Mark Chadwick

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Shimano (7309) | A Slow but Steady Ascent

​Shimano's cautious guidance for FY25 justified by recovering bike market, strong financial position, and quality performance. Investors watching...

Mark Chadwick

Shimano (7309) | Q4 Preview and Outlook

​Market conditions worsened in late 2024, raising concerns about Q4 earnings, but investors should focus on Shimano's long-term value and 2025...

Mark Chadwick

Shimano: An Opportunity for Activist Investors

​Shimano faces challenges with declining sales, but presents a potential opportunity for investors with its low stock valuation.

Mark Chadwick

Shimano (7309) | Bike Sales Rebound as China Fuels Growth

​Shimano's bike sales rebound with 8% growth in Q3, driven by China's surge to 31% share and improved profitability with operating margin at 18.6%.

Mark Chadwick

Shimano (7309) | Profit Recovery Derailed

We expect the share price to sell-off following the guidance cut. The inventory overhang could take a while to resolve given weak bike sales in Europe

Mark Chadwick

Shimano's cautious guidance for FY25 justified by recovering bike market, strong financial position, and quality performance. Investors watching...

Market conditions worsened in late 2024, raising concerns about Q4 earnings, but investors should focus on Shimano's long-term value and 2025...

Shimano faces challenges with declining sales, but presents a potential opportunity for investors with its low stock valuation.

Shimano's bike sales rebound with 8% growth in Q3, driven by China's surge to 31% share and improved profitability with operating margin at 18.6%.