Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Shimano continues to reel from a slowdown in bike and fishing tackle sales post Covid</li>
<li>1Q operating profit beat the analyst consensus, but the upward revision to full year is minor and falls short of street estimates</li>
<li>The stock has priced in an improving outlook. However, valuations are now looking full compared to historical levels. </li>
</ul>


Shimano continues to reel from a slowdown in bike and fishing tackle sales post Covid
1Q operating profit beat the analyst consensus, but the upward revision to full year is minor and falls short of street estimates
The stock has priced in an improving outlook. However, valuations are now looking full compared to historical levels. 


<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

<ul>
<li>Shimano Q3 results show a 32% YoY net sales decline, led by a 38% drop in bike component sales, BUT both sales and profit beat expectations</li>
<li>The company maintains cost control, sees improving gross margins, and reduces inventories, while cash flow and balance sheet remain strong</li>
<li>With the upward revision in full-year guidance, we believe the market will look through the still challenging Q4 outlook and focus instead on 2024 normalization and relatively low valuation</li>
</ul>


Shimano Q3 results show a 32% YoY net sales decline, led by a 38% drop in bike component sales, BUT both sales and profit beat expectations
The company maintains cost control, sees improving gross margins, and reduces inventories, while cash flow and balance sheet remain strong
With the upward revision in full-year guidance, we believe the market will look through the still challenging Q4 outlook and focus instead on 2024 normalization and relatively low valuation


Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Since mid-April we discussed how downside was limited on MSCI ACWI and EURO STOXX 50, and May 2nd discussed it was "quite possible" the lows were in.</li>
<li>Now, the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes have all broken out to new multi-year highs. Our bullish outlook (since early-November 2023) remains intact; expect higher prices ahead.</li>
<li>China (MSCI China) continues to lead the EM turnaround, and we remain bullish on the space. We highlight many large-cap EM buys within Communications, Technology, Discretionary; we remain bullish miners.</li>
</ul>


Since mid-April we discussed how downside was limited on MSCI ACWI and EURO STOXX 50, and May 2nd discussed it was "quite possible" the lows were in.
Now, the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes have all broken out to new multi-year highs. Our bullish outlook (since early-November 2023) remains intact; expect higher prices ahead.
China (MSCI China) continues to lead the EM turnaround, and we remain bullish on the space. We highlight many large-cap EM buys within Communications, Technology, Discretionary; we remain bullish miners.


Bullish Outlook Intact; EM and China Continue to Bottom; Buys in Comms, Tech, Discretionary, Miners

Thematic (Sector/Industry)

<ul>
<li>Dow loses over 500 points, its biggest daily loss in over 10 months, as Treasury yields surged 14bps to 4.3%</li>
<li>Shimano announces disappointing 2024 earnings guidance, well short of street estimates. Perhaps time to do more on capital allocation</li>
<li>Sapporo looks like it is bowing to pressure from activist, 3D Partners, regarding a potential sale of non-core real estate</li>
</ul>


Dow loses over 500 points, its biggest daily loss in over 10 months, as Treasury yields surged 14bps to 4.3%
Shimano announces disappointing 2024 earnings guidance, well short of street estimates. Perhaps time to do more on capital allocation
Sapporo looks like it is bowing to pressure from activist, 3D Partners, regarding a potential sale of non-core real estate


Ohayo Japan | Inflation Hits Stocks; Shimano Hits a Pothole

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Shimano Inc (7309 JP)

Shimano (7309) | Stuck in a Low Gear

Shimano continues to reel from a slowdown in bike and fishing tackle sales post Covid. Upward revision to full year operating profit and a small...

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 (7309) | A Clear Road Ahead

Shimano Q3 results: Net sales decline, but beat expectations. Cost control, improving margins, and strong balance sheet. We turn bullish on...

Mark Chadwick

Bullish Outlook Intact; EM and China Continue to Bottom; Buys in Comms, Tech, Discretionary, Miners

Bullish Outlook Intact $ACWI; EM and China Continue to Lead; U.S. Dollar (DXY), WTI Crude Oil, and Gasoline Prices Rolling Over; Buys in: Comms,...

Vermilion Research

Ohayo Japan | Inflation Hits Stocks; Shimano Hits a Pothole

Dow plunges 500 points on surging Treasury yields. Shimano's weak earnings guidance prompts capital allocation concerns. Sapporo may sell non-core...

Mark Chadwick

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Shimano (7309) | Stuck in a Low Gear

Shimano continues to reel from a slowdown in bike and fishing tackle sales post Covid. Upward revision to full year operating profit and a small...

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 (7309) | A Clear Road Ahead

​Shimano Q3 results: Net sales decline, but beat expectations. Cost control, improving margins, and strong balance sheet. We turn bullish on...

Mark Chadwick

Bullish Outlook Intact; EM and China Continue to Bottom; Buys in Comms, Tech, Discretionary, Miners

Bullish Outlook Intact $ACWI; EM and China Continue to Lead; U.S. Dollar (DXY), WTI Crude Oil, and Gasoline Prices Rolling Over; Buys in: Comms,...

Vermilion Research

Ohayo Japan | Inflation Hits Stocks; Shimano Hits a Pothole

​Dow plunges 500 points on surging Treasury yields. Shimano's weak earnings guidance prompts capital allocation concerns. Sapporo may sell non-core...

Mark Chadwick

Shimano Q3 results: Net sales decline, but beat expectations. Cost control, improving margins, and strong balance sheet. We turn bullish on...

Dow plunges 500 points on surging Treasury yields. Shimano's weak earnings guidance prompts capital allocation concerns. Sapporo may sell non-core...