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Japanese Cycling Gear Company Shimano Set To Benefit From UCI Rule Change

Japanese company Shimano "is poised to race ahead thanks to a rule change by professional cycling’s governing body," according to Leo Lewis of the FINANCIAL TIMES. After years of controversy and lobbying, "a ban on disc brakes once stubbornly upheld" by the Int'l Cycling Union (UCI) has been lifted. Should various trials of disc brakes succeed, competitors in the Tour de France and other great road races "will be free to hurl themselves into downhill corners with even greater abandon, even in wet conditions." Analysts said that the technology "is then likely to eventually become standard in the amateur racing bike market" -- a boon for the handful of high-end disc brake suppliers, Shimano dominant among them. For some analysts, the promise of disc brakes "is a roaring 'buy' signal for Shimano, even after three years of stellar stock price performance." Shares in the company "are hovering close to all-time highs" above 19,000 yen ($158). Fund managers said that picking a bicycle maker from dozens around the world "was difficult," but the broad bet on cycling was made straightforward by Shimano’s 70% global market share in brakes and gears. Analysts said that sales, especially to the developed markets of the U.S. and Europe, "should receive a further boost from the 2016 Rio Olympics." As far back as the 1996 Atlanta Games, Olympics years "have handed Shimano average year-on-year revenue growth rates of 10 per cent, versus just 4 per cent growth in non-Olympics years" (FT, 10/12).

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