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.


Equity Derivatives Broker - Delta One Japan, Vantage Capital Markets Japan

François-Xavier Pustoc'h

Equity Derivatives Broker - Delta One Japan

Independent Financial Broker

Vantage Capital Markets Japan

We provide world class financial solutions to our extensive institutional client base including rapidly growing corporations, leading investment banks, commercial banks, asset managers, private equity funds, family offices and hedge funds.

Our services include capital market offerings and placements, wholesale brokerage and execution of cash and derivative products (both listed and OTC) across a range of asset classes.

VCM has offices in London, Hong Kong, Tokyo and Dubai from where we service our global client base. Our strength lies in the experience and quality of our teams, supported by excellent operations and infrastructure.

Event-Driven

<ul>
<li>Rebalancing Candidates ADD: Kokusai Electric Corp (6525.T): High Liquidity Group TOP 75, BayCurrent Inc (6532.T), Shift Inc (3697.T)</li>
<li>Rebalancing Candidates DEL: Mitsubishi Logistics Corp. (9301.T), Okuma Corp. (6103.T), Tokuyama Corp (4043.T)</li>
<li>Capping Ratio: Fast Retailing Co Ltd (9983.T)’s Price Adjustment Factor from 2.7 to 2.4</li>
</ul>


Rebalancing Candidates ADD: Kokusai Electric Corp (6525.T): High Liquidity Group TOP 75, BayCurrent Inc (6532.T), Shift Inc (3697.T)
Rebalancing Candidates DEL: Mitsubishi Logistics Corp. (9301.T), Okuma Corp. (6103.T), Tokuyama Corp (4043.T)
Capping Ratio: Fast Retailing Co Ltd (9983.T)’s Price Adjustment Factor from 2.7 to 2.4


Nikkei 225 Stock Average Rebalancing – January 2025

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>The review period for the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 Index</a> March rebalance ends in 3 weeks. There could be one outright change and one or two others driven by sector balance.</li>
<li>
<a href="https://www.smartkarma.com/entities/shift-inc" target="_blank" data-smartkarma-citation="entities:7266:1" rel="noopener">Shift Inc (3697 JP)</a> will have a 15:1 stock split next week and that puts the stock in the list of potential inclusions over the next couple of rebalances.</li>
<li>The recent drop in <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a>'s stock price will lead to a single step drop in the PAF. That means less passive selling and a smaller funding buy.</li>
</ul>


The review period for the Nikkei 225 Index March rebalance ends in 3 weeks. There could be one outright change and one or two others driven by sector balance.

Shift Inc (3697 JP) will have a 15:1 stock split next week and that puts the stock in the list of potential inclusions over the next couple of rebalances.
The recent drop in Fast Retailing (9983 JP)'s stock price will lead to a single step drop in the PAF. That means less passive selling and a smaller funding buy.


Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding

<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

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

Nikkei 225 Stock Average Rebalancing – January 2025

As per the “Periodic Review” conducted twice a year by Nikkei Inc. (Nikkei), the constituents of Nikkei 225 will be reviewed and changed at the end...

Vantage Capital Markets Japan

Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding

With 4 days left in the review period, Fast Retailing is now in double capping zone which would require passives to sell 13.3m shares in March. If...

Brian Freitas

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

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

Nikkei 225 Stock Average Rebalancing – January 2025

As per the “Periodic Review” conducted twice a year by Nikkei Inc. (Nikkei), the constituents of Nikkei 225 will be reviewed and changed at the end...

Vantage Capital Markets Japan

Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding

With 4 days left in the review period, Fast Retailing is now in double capping zone which would require passives to sell 13.3m shares in March. If...

Brian Freitas

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'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.