UBS Group expects a 8.3% year-on-year increase in Techtronic Industries' mid-term revenue.
According to the research report released by UBS, they maintained their Buy rating on Techtronic Industries (00669), believing that its diversified capabilities and battery purchases enable it to deal with potential trade frictions. The report also expects a smooth transition for the CEO and sets a target price of HKD 121. The company's stock price has declined by 20% since May due to various macro factors, such as the speed of the Fed's rate cuts and concerns over increased tariffs, as well as internal factors such as the replacement of the CEO. However, the bank believes that the company's fundamentals are not affected and is optimistic about its short-term and long-term prospects.
The bank pointed out that, based on the company's channel survey on mainland suppliers and comparison with the industry, Techtronic's mid-term performance may exceed market expectations. The consumer business, which accounts for one-third of revenue, is expected to grow, and the professional segment, which accounts for two-thirds of revenue, may once again perform better than expected. The bank expects a 8.3% year-on-year increase in Techtronic's mid-term revenue, with the consumer and professional segments expected to grow by 2% and 12%, respectively. The gross margin is expected to expand by 0.4 percentage points due to product optimization and reduced inventory drag. The mid-term profit is expected to increase year-on-year, and the bank expects Techtronic's full-year revenue and profit to increase by 8.4% and 15.8%, respectively, surpassing the company's guidance.