Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Shimano beat Q1 profit expectations but stuck to cautious full-year guidance, signalling stabilisation in bike markets rather than a real recovery.</li>
<li>Margins improved, inventories stabilised — but Shimano’s profitability remains well below historic highs, with recovery likely to stay slow and steady.</li>
<li>Strong balance sheet, resilient pricing, limited US exposure: Shimano looks a defensive bet, even if management's guidance ends up on the optimistic side.</li>
</ul>


Shimano beat Q1 profit expectations but stuck to cautious full-year guidance, signalling stabilisation in bike markets rather than a real recovery.
Margins improved, inventories stabilised — but Shimano’s profitability remains well below historic highs, with recovery likely to stay slow and steady.
Strong balance sheet, resilient pricing, limited US exposure: Shimano looks a defensive bet, even if management's guidance ends up on the optimistic side.


<ul>
<li>US tariffs could sharply cut Shimano’s H2 operating profit by up to 57%, despite limited direct exposure, due to opaque supply chains via China and Taiwan.</li>
<li>Valuation would look stretched at 25x EV/EBIT versus historical 20x, if earnings fall short of current guidance.</li>
<li>Shimano’s ¥530bn net cash pile offers room to boost shareholder returns through buybacks or dividends.</li>
</ul>


US tariffs could sharply cut Shimano’s H2 operating profit by up to 57%, despite limited direct exposure, due to opaque supply chains via China and Taiwan.
Valuation would look stretched at 25x EV/EBIT versus historical 20x, if earnings fall short of current guidance.
Shimano’s ¥530bn net cash pile offers room to boost shareholder returns through buybacks or dividends.


<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 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

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) | Coasting, Not Sprinting

Shimano's Q1 profits beat expectations, but cautious full-year guidance suggests a slow recovery in bike markets with margins improving and...

Mark Chadwick

Shimano (7309) | Gears Grinding

US tariffs could significantly impact Shimano's profits due to supply chain exposure, potentially leading to stretched valuation and potential for...

Mark Chadwick

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 (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

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Shimano (7309) | Coasting, Not Sprinting

​Shimano's Q1 profits beat expectations, but cautious full-year guidance suggests a slow recovery in bike markets with margins improving and...

Mark Chadwick

Shimano (7309) | Gears Grinding

​US tariffs could significantly impact Shimano's profits due to supply chain exposure, potentially leading to stretched valuation and potential for...

Mark Chadwick

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 (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's Q1 profits beat expectations, but cautious full-year guidance suggests a slow recovery in bike markets with margins improving and...

US tariffs could significantly impact Shimano's profits due to supply chain exposure, potentially leading to stretched valuation and potential for...

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...