[ET Net News Agency, 7 September 2018] Given the macro slowdown in China, Citi Research
said investors are increasingly focusing on exporters and particularly like companies
consistently delivering growth, among them Techtronic Industries (TTI)(00669) and Shenzhou
International (02313).
Many investors (from Citi's China Conference meetings held in Singapore) suspect demand
is being front-loaded ahead of a new round of US tariffs, with TTI recording revenue
growth of 19% in 1H, its highest interim level in the past decade.
The research house sees front-loaded demand as a small (or even non-existent) driver of
TTI's 1H performance. Management said the tariffs were not a factor at all, as the details
of the US$200bn batch were not known in 1H.
Citi said key takeaways are: (1) more EBIT margin expansion in 2H due to CNY reversion
to depreciation and a lower degree of hikes in material costs, (2) capacity expansion in
Vietnam/US rather than China, (3) revenue growth in 2H to continue in the double digits,
(4) Milwaukee revenue growth to be at least 20% pa in the coming five years based on the
current product pipeline.
Citi maintained its "buy" call on TTI, with a target price of HK$57. (KL)