Japan Specialist

Mark Chadwick

Equity Bottom-Up

<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.


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

<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>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 (NKY INDEX)</a> September rebalance ended yesterday. There could be three changes at the rebalance with sector balance in focus for the additions.</li>
<li>
<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 capping in the index has been confirmed and its index weight will drop by around 0.9% resulting in big selling at the close on 30 September. </li>
<li>Passive trackers will need to buy between 3.5-35x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-42.5x ADV on the deletions.</li>
</ul>


The review period for the Nikkei 225 (NKY INDEX) September rebalance ended yesterday. There could be three changes at the rebalance with sector balance in focus for the additions.

Fast Retailing (9983 JP)'s capping in the index has been confirmed and its index weight will drop by around 0.9% resulting in big selling at the close on 30 September. 
Passive trackers will need to buy between 3.5-35x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-42.5x ADV on the deletions.


Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed

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) | 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 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 (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

Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed

Review period ended yesterday. Fast Retailing's capping will result in a 0.9% drop in index weight. There could be 3 index changes with sector...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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 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 (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

Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed

Review period ended yesterday. Fast Retailing's capping will result in a 0.9% drop in index weight. There could be 3 index changes with sector...

Brian Freitas

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%.