Core Insights - The company reported strong performance in H1 2025, with revenue of $7.833 billion (yoy +7.1%) and net profit of $628 million (yoy +14.2%), achieving a net profit margin of 8.0% (yoy +0.5pct) [1][2] - Growth was driven by strong sales of flagship brands Milwaukee and RYOBI, an increase in high-end brand revenue share, and strategic reduction of non-core business investments [1][2] - The company maintains a "buy" rating due to the expected continued growth of Milwaukee and RYOBI brands and a solid long-term growth logic [1] Business Performance - The electric tools segment generated $7.425 billion in revenue (yoy +7.9%), with Milwaukee's revenue growing by 11.9% and RYOBI's by 8.7% [1] - The floor care and cleaning segment saw revenue of $408 million (yoy -4.8%), but operating profit increased by 3.6% to $97 million, attributed to a shift from AC to rechargeable products and reduced non-essential spending [1] - North America and Europe are core markets, with revenues of $5.872 billion and $1.401 billion respectively, both showing steady growth [1] Profitability and Efficiency - The company's gross margin for H1 2025 was 40.3% (yoy +0.3pct), benefiting from a higher proportion of high-margin businesses and improved operational efficiency [2] - Total operating expenses were $2.452 billion (yoy +6.5%), with a period expense ratio of 31.3% (yoy -0.2pct) [2] - Management expenses decreased due to enhanced operational efficiency, while R&D expenses increased due to higher investment in new products and technologies [2] Competitive Advantages - The company holds a leading position in the electric tools and outdoor power equipment (OPE) market, with a diverse portfolio of 13 sub-brands catering to various consumer needs [2] - The company has a global production footprint, with 39% of capacity in China and significant operations in Vietnam, the U.S., and Mexico, allowing it to respond flexibly to tariff disruptions [2] Financial Forecast and Valuation - The company maintains profit forecasts for 2025-2026 and introduces a forecast for 2027, expecting net profits of $1.293 billion, $1.473 billion, and $1.737 billion respectively, with corresponding EPS of $0.71, $0.80, and $0.95 [2] - The target price is set at HKD 132.59, with a target PE of 24 times for 2025, reflecting the company's strong market position and profitability improvements [2]

Group 1: Steel Industry - The steel industry is expected to benefit from self-initiated production cuts, with industry prosperity bottoming out in Q3 2024. If the anti-involution policy promotes crude steel production cuts, it could further enhance profit recovery [2][3] - The current phase of the steel sector is characterized by policy expectation trading and fundamental improvement, similar to the previous demand downturn cycle [2][3] - The adjustment in the Chinese steel industry may resemble a prolonged battle, drawing parallels with Japan's steel development history [2] Group 2: Saint Bella (2508 HK) - Saint Bella is the largest postpartum care and recovery brand group in Asia and China, with 96 maternity centers in 30 cities globally as of June 2025. The company is rated "Buy" with a target price of HKD 9.76, corresponding to a 27X PE for 2026 [3][14] - The company is expected to achieve a revenue and adjusted net profit CAGR of 28% and 94% respectively from 2025 to 2027, driven by stable same-store growth and rapid store expansion [3] - Saint Bella aims to expand its family care and women's health product lines globally, leveraging its multi-brand and platform capabilities [3] Group 3: Yum China (9987 HK) - Yum China reported Q2 2025 revenue of USD 2.787 billion, a year-on-year increase of 4%, and an operating profit of USD 304 million, exceeding expectations [5] - The company maintains a target of opening 1,600 to 1,800 new stores in 2025, with a focus on sustaining same-store sales growth in the second half of the year [5] - The operating profit margin improved to 10.9%, reflecting the resilience of the leading brand [5] Group 4: Techtronic Industries (669 HK) - Techtronic Industries achieved a revenue of USD 7.833 billion in H1 2025, a year-on-year increase of 7.1%, with a net profit of USD 628 million, up 14.2% [6] - The growth is attributed to strong sales of flagship brands Milwaukee and RYOBI, alongside a strategic reduction in non-core business investments [6] - The company is positioned as a leading global brand in power tools and outdoor products, with a favorable long-term growth outlook [6] Group 5: Dongmu Co., Ltd. (600114 CH) - Dongmu Co., Ltd. reported H1 2025 revenue of CNY 2.930 billion, a year-on-year increase of 24.51%, and a net profit of CNY 261 million, up 37.61% [7] - The strong performance is driven by robust demand in the automotive and home appliance sectors [7] - The company is recognized as a leader in the powder metallurgy industry, maintaining an "Overweight" rating [7] Group 6: Zhongchong Co., Ltd. (002891 CH) - Zhongchong Co., Ltd. achieved H1 2025 revenue of CNY 2.432 billion, a year-on-year increase of 24.32%, with a net profit of CNY 203 million, up 42.56% [10] - The company benefits from strong domestic sales growth of 39% and an 18% increase in overseas sales due to capacity expansion [10] - The target price for 2025 is set at CNY 79.52, maintaining a "Buy" rating [10]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 132.59 [6][5]. Core Insights - The company reported strong performance in H1 2025, achieving revenue of USD 7.833 billion (yoy +7.1%) and a net profit of USD 628 million (yoy +14.2%), with a net profit margin of 8.0% (yoy +0.5pct) [1][3]. - Growth is driven by flagship brands Milwaukee and RYOBI, with a strategic focus on high-end brands and improved operational efficiency [1][4]. - The company is positioned as a global leader in electric tools and outdoor power equipment (OPE), benefiting from a diversified global production capacity to navigate trade challenges [1][4]. Revenue Performance - The electric tools segment generated USD 7.425 billion in H1 2025, up 7.9% yoy, with Milwaukee's revenue increasing by 11.9% and RYOBI's by 8.7% [2]. - The floor care and cleaning segment saw revenue decline to USD 408 million (yoy -4.8%), but operating profit increased by 3.6% to USD 9.7 million due to a shift towards rechargeable products [2]. Profitability Analysis - The company's gross margin for H1 2025 was 40.3% (yoy +0.3pct), attributed to the higher contribution from profitable brands and improved operational efficiency [3]. - Total operating expenses were USD 2.452 billion (yoy +6.5%), with a corresponding expense ratio of 31.3% (yoy -0.2pct) [3]. Brand and Technology Advantage - The company has a strong brand and technological edge, with 13 sub-brands catering to various consumer segments and a commitment to lithium battery upgrades [4]. - Global production facilities are strategically located, with 39% of capacity in China and significant portions in Vietnam, the US, and Mexico, allowing flexibility in response to tariff disruptions [4]. Earnings Forecast and Valuation - The company’s net profit is projected to be USD 1.293 billion, USD 1.473 billion, and USD 1.737 billion for 2025, 2026, and 2027 respectively, with corresponding EPS of USD 0.71, USD 0.80, and USD 0.95 [5][10]. - The report assigns a target PE of 24x for 2025, reflecting the company's leading position and consistent profitability improvements [5][10].