Japan Specialist

Mark Chadwick

Equity Bottom-Up

<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>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's Q2 results exceeded expectations with revenue and operating profit significantly beating estimates despite a YoY decline.</li>
<li>Full-Year revenue and operating profit guidance were revised upward, reflecting improved performance and aligning with analyst consensus.</li>
<li>Our estimate for FY25 was significantly raised; despite full valuations, further recovery and potential shareholder returns offer continued bullish outlook.</li>
</ul>


Shimano's Q2 results exceeded expectations with revenue and operating profit significantly beating estimates despite a YoY decline.
Full-Year revenue and operating profit guidance were revised upward, reflecting improved performance and aligning with analyst consensus.
Our estimate for FY25 was significantly raised; despite full valuations, further recovery and potential shareholder returns offer continued bullish outlook.


Shimano (7309) | Shifts Gears with Upbeat Guidance

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

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

<ul>
<li>Semi's and cons disc leading way higher, Japan set for strong start.</li>
<li>Apple breaking downtrend on news its releasing a new game center to better compete against consoles.</li>
<li>Nuclear names surging again which sets a continued positive tone for heavies and related.</li>
</ul>


Semi's and cons disc leading way higher, Japan set for strong start.
Apple breaking downtrend on news its releasing a new game center to better compete against consoles.
Nuclear names surging again which sets a continued positive tone for heavies and related.


Japan Morning Connection: Risk-On with Investors Liking Optimistic Tone from EU-US Talks

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) | 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) | 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) | Shifts Gears with Upbeat Guidance

Shimano's Q2 results surpassed expectations, leading to an upward revision in full-year guidance and a bullish outlook for potential shareholder...

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

Japan Morning Connection: Risk-On with Investors Liking Optimistic Tone from EU-US Talks

May be a lift for names in Japan with high EU exposures. EU defence spending increasing sentiment for anything related to nuclear plant...

Andrew Jackson

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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) | 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) | Shifts Gears with Upbeat Guidance

​Shimano's Q2 results surpassed expectations, leading to an upward revision in full-year guidance and a bullish outlook for potential shareholder...

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

Japan Morning Connection: Risk-On with Investors Liking Optimistic Tone from EU-US Talks

May be a lift for names in Japan with high EU exposures. EU defence spending increasing sentiment for anything related to nuclear plant...

Andrew Jackson

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%.

Shimano's Q2 results surpassed expectations, leading to an upward revision in full-year guidance and a bullish outlook for potential shareholder...

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