[ET Net News Agency, 23 March 2018] UBS Global Research lifted its target price for
Techtronic Industries (TTI)(00669) to HK$29.7 from HK$27.3, and reiterated its "sell"
rating noting decelerating earnings growth prospects.
The research house said TTI's 2017 results were in line with its estimates. With
sustained high raw materials costs, a strong Rmb and rising competition in the US (as
TTI's rising marketing expense ratio shows), UBS expects TTI's margin expansion to
decelerate and downside risks to consensus margin assumptions.
UBS expects TTI's OPM to improve only slightly, by 10/20/10bps in FY2018-20. Demand
uncertainty from US rates hikes, rising competition, and trade friction US rates correlate
negatively to TTI's power tool sales growth, given TTI's exposure to US home
building/construction; as rates rise, this bodes ill for TTI. (KL)