Shimano's High-End Component Demand Remains Strong Despite Declining Entry-Level Bicycle Demand

Recent comments by Shimano’s management in the June quarter announcement suggested declining demand for entry-level bicycles, as market inventory (including customer inventory) increased from the previous quarter. This, in turn, weakened Shimano’s orders in North America and emerging markets. On the other hand, high-end bicycle demand continues to be strong with record backlogs, which kept market inventory at low levels. Nevertheless, this disparity was expected, and as our medium-term projection remains largely intact, we retain our fair value estimate at JPY 29,000.