Core Viewpoint - The company has experienced a decline in valuation since being short-sold, with its performance lagging behind the market despite a slight increase over the past three years. The fundamentals driving the business have weakened, and the company is awaiting a valuation anchor [1]. Financial Performance - For the first half of 2025, the company reported revenue of $7.833 billion, a year-on-year increase of 7.13%, and a net profit of $628 million, up 14.17%. The gross margin improved by 34 basis points to 40.3%, leading to a net profit margin of 8.17% [1]. - Earnings per share were $0.3437, with an interim dividend proposed at HKD 1.25 (approximately $0.1609), resulting in a payout ratio of 46.81% [1]. Business Segments - The electric tools segment showed robust performance, generating $7.425 billion in revenue, a 7.85% increase, accounting for 94.8% of total revenue. The two main brands, MILWAUKEE and RYOBI, contributed significantly to this growth, with MILWAUKEE sales increasing by 11.9% and RYOBI by 8.7% [2][4]. - The floor care segment saw a revenue decline of 6%, reducing its market share to 5.2%, but it remained profitable with a segment profit of $10 million [5]. Market Dynamics - The global electric tools market has shown stable but modest growth, with a compound annual growth rate (CAGR) of 1.03% from 2018 to 2023. The cordless tools segment is expected to grow at a CAGR of 9.9% from 2020 to 2025, with cordless products projected to account for 56.12% of the market by 2025 [6]. - The company has maintained a strong market presence in North America and Europe, with revenues of $5.872 billion and $1.4 billion respectively, reflecting year-on-year growth of 7.52% and 11.9% [6]. Financial Health - The company has a healthy financial position, with a debt-to-asset ratio of 52.1% and a net cash position of $1.608 billion, covering its interest-bearing debt of $1.122 billion. The average operating cash flow over the past three years has been $1.87 billion [7]. - The company has consistently returned value to shareholders through dividends and share buybacks, with a total of 54 dividends paid since 2000 and a cumulative payout ratio of 38.14% [8]. Market Sentiment - Despite a general market rebound since 2022, the company's stock performance has been lackluster, with an average annual increase of only about 10%. The market is currently awaiting a catalyst for valuation recovery [8].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1][4][6] Core Insights - The company is expected to benefit from the release of pent-up demand in the U.S. real estate market and the completion of overseas production capacity, which will enhance earnings certainty [4][6] - The net profit forecasts for 2025 and 2026 have been slightly adjusted down to $1.345 billion and $1.632 billion, respectively, with a new forecast for 2027 at $1.940 billion, reflecting year-on-year growth rates of 19.9%, 21.3%, and 18.9% [4][7] - The current valuation reflects significant market concerns regarding tariffs and potential U.S. economic recession, but the company's strong Milwaukee brand and ongoing improvements in weaker areas are expected to drive revenue growth [4][6] Financial Summary and Valuation Metrics - Revenue for 2024 is projected at $14.622 billion, with a year-on-year growth of 6.5%, and is expected to reach $16.045 billion in 2025, representing a 9.7% increase [7] - Net profit for 2024 is estimated at $1.122 billion, with a year-on-year increase of 14.9%, and is expected to grow to $1.345 billion in 2025, reflecting a 19.9% increase [7] - The gross margin is expected to improve from 39.5% in 2023 to 40.5% in 2025, while the net margin is projected to rise from 7.1% to 8.4% during the same period [7] - The diluted EPS is forecasted to increase from $0.5 in 2023 to $0.7 in 2025, with a corresponding P/E ratio decreasing from 27.6 to 20.0 [7]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The report indicates that the company is expected to benefit from the release of demand in the U.S. real estate market and the completion of overseas production capacity, which will enhance earnings certainty [4] - The net profit forecasts for 2025 and 2026 have been slightly adjusted down to $1.345 billion and $1.632 billion, respectively, with a new forecast for 2027 at $1.940 billion, reflecting year-on-year growth rates of 19.9%, 21.3%, and 18.9% [4] - The current valuation reflects significant market concerns regarding tariffs and potential U.S. economic recession, but the company's strong Milwaukee brand and ongoing improvements in weaker areas are expected to drive revenue growth [4] Financial Summary and Valuation Metrics - Revenue for 2024H2 was $7.31 billion, a year-on-year increase of 6.7%, driven by the Milwaukee brand, which saw an estimated growth of 11.4% [5] - The company expects revenue growth in 2025 to be in the mid to high single digits, with Milwaukee maintaining double-digit growth and RYOBI achieving single-digit growth [6] - Financial metrics for 2023A to 2027E include: - Revenue (million USD): 13,731 (2023A), 14,622 (2024A), 16,045 (2025E), 17,483 (2026E), 19,065 (2027E) - Net Profit (million USD): 976 (2023A), 1,122 (2024A), 1,345 (2025E), 1,632 (2026E), 1,940 (2027E) - EPS (diluted, USD): 0.5 (2023A), 0.6 (2024A), 0.7 (2025E), 0.9 (2026E), 1.1 (2027E) [7]