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

Thematic (Sector/Industry)

<ul>
<li>Japan's tech market sees major movement with Carlyle's 120% premium bid for Kaonavi, highlighting the stark valuation gap between Japanese and US SaaS companies.</li>
<li>Many Japanese software firms trade at significantly lower multiples (4x) versus US peers (8x), attracting private equity attention.</li>
<li>Japanese stocks ended the week up around 1%. Global macro concerns and inflation lifting bond yields and raising concern over a stronger yen. </li>
</ul>


Japan's tech market sees major movement with Carlyle's 120% premium bid for Kaonavi, highlighting the stark valuation gap between Japanese and US SaaS companies.
Many Japanese software firms trade at significantly lower multiples (4x) versus US peers (8x), attracting private equity attention.
Japanese stocks ended the week up around 1%. Global macro concerns and inflation lifting bond yields and raising concern over a stronger yen. 


Japan Strategy Weekly | Carlyle's Kaonavi Deal Signals a Shift in Japanese Valuations

<ul>
<li>Nikkei Futures marginally lower with few new drivers given US holidays. Japan volumes likely to remain subdued</li>
<li>China/Japan tensions, tech outperformance, US rate cuts, BoJ's dovish stance - stock supportive  </li>
<li>UK retailer Halfords' strong cycling revenue suggests Shimano may benefit from inventory restocking by retailers in 2H, preparing for next summer's peak demand.</li>
</ul>


Nikkei Futures marginally lower with few new drivers given US holidays. Japan volumes likely to remain subdued
China/Japan tensions, tech outperformance, US rate cuts, BoJ's dovish stance - stock supportive  
UK retailer Halfords' strong cycling revenue suggests Shimano may benefit from inventory restocking by retailers in 2H, preparing for next summer's peak demand.


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

Japan Strategy Weekly | Carlyle's Kaonavi Deal Signals a Shift in Japanese Valuations

Carlyle's bid for Kaonavi underscores valuation gap between Japanese and US SaaS companies, attracting private equity interest. Japanese stocks up...

Mark Chadwick

Ohayo Japan | Grateful for Gains

Nikkei Futures slightly down due to US holidays, but stock supported by tech outperformance; Halfords' strong cycling revenue hinting at Shimano...

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

Japan Strategy Weekly | Carlyle's Kaonavi Deal Signals a Shift in Japanese Valuations

​Carlyle's bid for Kaonavi underscores valuation gap between Japanese and US SaaS companies, attracting private equity interest. Japanese stocks up...

Mark Chadwick

Ohayo Japan | Grateful for Gains

​Nikkei Futures slightly down due to US holidays, but stock supported by tech outperformance; Halfords' strong cycling revenue hinting at Shimano...

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.

Carlyle's bid for Kaonavi underscores valuation gap between Japanese and US SaaS companies, attracting private equity interest. Japanese stocks up...

Nikkei Futures slightly down due to US holidays, but stock supported by tech outperformance; Halfords' strong cycling revenue hinting at Shimano...