Jefferies released a research report noting that Techtronic Industries (00669) recently announced its 2025 financial results, with revenue increasing by 4.4% year-on-year and net profit rising by 6.8% annually. However, second-half revenue grew by only 1.6% compared to the same period last year, falling short of expectations, while net profit declined by 0.2% year-on-year. Despite this, management expressed confidence in the group’s performance for 2026, indicating that uncertainties related to tariffs have diminished. The company expects its Milwaukee and Ryobi brands to achieve low double-digit and low-to-mid single-digit sales growth, respectively. Due to elevated valuations, Jefferies maintained a "Hold" rating but raised the target price from HK$95.35 to HK$117.81, based on a projected 2026 price-to-earnings ratio of 19 times.
Jefferies stated that while Techtronic’s second-half 2025 results were slightly below expectations, the company’s guidance remains solid. Looking ahead, management is confident that the group can achieve mid-to-high single-digit growth in 2026, with Milwaukee expected to grow 10% to 11% year-on-year and Ryobi projected to deliver low-to-mid single-digit growth. Management also expressed optimism about sustainable gross margin expansion in the coming years, driven by strong performance in the Milwaukee business and robust results in Europe, the Middle East, Africa, and the Asia-Pacific region. Jefferies forecasts that the group’s gross margin will further increase by 30 basis points in 2026, reaching 41.5%.
As for the EBIT margin, management is optimistic about achieving a 10% EBIT margin by 2027 or earlier, compared to 8.8% in 2025. Excluding a one-time exit cost of 50 basis points, the normalized EBIT margin for 2025 was 9.3%, higher than the 8.7% recorded in 2024. Jefferies’ model projects the group’s EBIT margin to reach 9.5% in 2026 and 10.1% in 2027.
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