"Major Banks" Huayan lowers Techtronic Industries' target price to 108 yuan, short-term sales slow but mid-term outlook is stable

HSBC's research report indicates that Techtronic Industries (00669.HK) has seen its stock price decline by approximately 9% this year, significantly underperforming the Hang Seng Index (which has risen about 30% this year), due to uncertainties surrounding tariffs leading to a slowdown in growth. The bank believes the company's mid-term outlook remains solid, forecasting a compound annual growth rate of 7% for revenue and 14% for earnings per share from 2024 to 2027, but it still faces pressure from slowing sales and the termination of its HART business in the short term.

The bank had previously anticipated that the company's growth would slow in the second half of this year, as Milwaukee has ceased shipping certain products to the U.S. due to tariffs, and shipments have also seen a decline. The bank now expects shipments to be weaker than previously anticipated, as promotional activities in North America have been canceled due to tariff issues.

However, the bank believes that end-user sales for Techtronic Industries remain strong, and the demand for inventory replenishment should boost growth performance next year. It has revised its revenue growth forecast for the second half of 2025 down from 5.1% to 2.3%, and has lowered its EBIT margin forecast for the same period from 8.8% to 8.4%; the target price has been reduced from HKD 112 to HKD 108, maintaining a "Buy" rating, as it believes Techtronic Industries will continue to gain market share in an uncertain trade environment, and margin expansion may accelerate starting next year