7309.T short pitch:
– Shimano – the largest producer of bicycle parts in the world.
– Significant COVID beneficiary with inflated sales and margins.
– Japanese investors are incorrectly anchoring on this strong recent performance.
– Optimistic consensus forecasts show flat revenue for 2023/24 and a continuation of a recent uptrend after that.
– This bullish narrative is wrong.
– Shimano’s cycles have been fairly predictable, with past booms resulting in multi-year hangovers.
– Shimano has already begun reporting normal/above normal inventories in its low-mid-end bikes
– Higher-end bikes are expected to follow suit.
7309.T valuation:
– Bear case 2024 EPS expectations at ¥600.
– At 20x multiple would be ¥12000 stock.
Exp. gain: 16-45%
Full write-up (free guest account required):
https://www.valueinvestorsclub.com/idea/Shimano_Inc/1651204119