UBS has released a research report indicating that TECHTRONIC IND (00669) delivered better-than-expected first-half results. Consequently, the firm has raised its earnings per share forecasts for 2026 to 2028 by an average of approximately 3%, and lifted the price target from HK$148 to HK$168. This new target corresponds to a 2027 forecast price-to-earnings ratio of about 23 times, which exceeds the stock's historical P/E range of roughly 15 to 20 times.
UBS stated that it considers this valuation premium reasonable, as it anticipates stronger profit growth from 2026 to 2028 compared to the past. The firm has maintained its "Buy" rating on the stock. Management pointed out that the increasing demand for artificial intelligence data centers, which involve more complex systems and require tool usage density twice that of general infrastructure projects, combined with a persistent labor shortage in the United States, is beneficial for the company's related innovative tools and solutions business.
Currently, data center-related business accounts for approximately 15% to 20% of Milwaukee's revenue, while Milwaukee represents about 71% of the group's total revenue. UBS expects revenue from AIDC-related sales to grow by more than 20% over the next few years, and by 2028, it is projected to account for roughly 20% of the group's total sales and 26% of its earnings. UBS currently forecasts that TECHTRONIC IND's earnings per share will achieve a compound annual growth rate of approximately 18% from 2026 to 2028.
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