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Overseas Equity ETF posted a return of 7.27% in the third quarter of 2025. Leading contributors in the First Eagle Overseas Equity ETF this quarter included Samsung Electronics Co Ltd Pfd Non-Voting, Alibaba Group, Barrick Mining, Newmont and Prosus N.V. Class N. The leading detractors in the quarter were Shimano, FUCHS SE Pref Registered Shs, SMC Corporation, Haleon and Philip Morris.
Global Equity ETF posted a return of 1.80% in the third quarter of 2025. Leading contributors in the First Eagle Global Equity ETF this quarter included Oracle, Alphabet Inc. Class C, Samsung Electronics Co Ltd Pfd Non-Voting, Barrick Mining and Newmont Corporation. The leading detractors in the quarter were Elevance Health, Philip Morris, Shimano, Comcast Corporation Class A and Salesforce.
Invesco EQV International Equity Fund's Q3 2025 performance was driven by strong returns from TSM, Legrand, Trip.com, and Shenzhen Inovance. TSM outperformed on robust AI chip demand and favorable margins, while Legrand benefited from data center growth and Trip.com from travel recovery. Key detractors included Shimano, RELX, and London Stock Exchange, impacted by margin pressures, AI disruption concerns, and rising competition.
I maintain a Hold rating for Shimano due to positive shareholder initiatives but the unfavorable bike market supply-demand dynamics will impact its outlook. Shimano's plans for higher shareholder returns and enhanced board independence are commendable, warranting a premium valuation for its investor-centric approach. But Shimano's FY25 net profit is forecasted to contract by 13%, driven by oversupply issues in key markets like Europe and China.
Shimano dominates the bicycle components market, and has a significant presence in fishing tackle, but faces declining sales following the pandemic. The company has a strong balance sheet with no debt, but dividends are not as high as might be expected. The stock's valuation metrics offer little assurance of near-term improvement. Nor do company statements.
Shimano's latest quarterly performance exceeded expectations, with revenue reaching $723 million, indicating a recovery in the bicycle components market, particularly in China. The company's net income is rebounding from its Q4 2023 low, although it remains below pandemic-era highs, suggesting early signs of growth reversal. Long-term growth prospects in the bicycle market remain strong, with secular trends supporting Shimano's future.
Short-term results are down, but long-term tailwinds remain. Softening demand is expected to pick up again in upcoming quarters, as we come down from record sales. The bicycle components market is expected to grow faster than the general economy, which could make Shimano an outperforming company.