OCBC Investment Research
Date of Report: 17 September 2025

Techtronic Industries: Powering Ahead Despite Near-Term Tariff Headwinds

Overview: Techtronic Industries’ Investment Case

Techtronic Industries (TTI), a global industrial powerhouse based in Hong Kong, stands at the forefront of the power tools sector, driven by relentless innovation and disciplined financial management. Although macroeconomic and tariff-related uncertainties are expected to slow sales growth in the second half of 2025, the company’s long-term growth trajectory remains robust, underpinned by strategic supply chain shifts and a powerful brand portfolio.

• Rating: BUY
• Last Close (17 Sep 2025): HKD 98.40
• Fair Value Estimate: HKD 139.00
• Market Capitalization: SGD 29.5 billion
• Ticker: 0669.HK
• Free Float: 78%
• Shares Outstanding: 1,831 million
• Top Shareholder: Pudwill (Horst Julius) 19.7%

Recent Performance and Outlook

Solid First Half, Near-Term Headwinds
TTI delivered a strong performance in 1H25, with revenue rising 7.1% YoY to USD 7.8 billion and net profit up 14.2% YoY to USD 628 million. However, the share price is down ~2% YTD, underperforming the Hang Seng Index’s 34% YTD gain. This lag is primarily due to market concerns over tariffs and a cautious macroeconomic backdrop.
Tariff Impact and Supply Chain Adjustments
Macroeconomic uncertainty and new tariffs are pressuring sales growth in 2H25. TTI is actively reassessing the profitability of products shipped from China to the US and is considering further supply chain relocations. Notably, the Milwaukee brand has suspended shipments of select SKUs to the US in response to the evolving tariff environment.
Mid-Term Growth Drivers
Despite the near-term challenges, TTI’s growth outlook from FY26 remains intact. Once capacity relocation is completed and tariffs stabilize, TTI is poised to accelerate growth. Product demand remains resilient, with Milwaukee targeting double-digit percentage YoY growth and Ryobi aiming for mid-single-digit percentage gains. The ongoing focus areas include mega projects, data centers, infrastructure, renewable energy, and product innovation.

Key Financials and Ratios

Business Segment Breakdown

TTI’s revenue is overwhelmingly driven by its Power Equipment segment, which accounted for 94% of FY24 sales. Floor Care & Appliances made up the remaining 6%. By geography, North America dominates with approximately 76% of FY24 revenue, followed by Europe at 16% and other countries at 8%.

Dividend and Earnings Growth

TTI has demonstrated consistent dividend growth, with dividends per share (DPS) increasing from \$0.17 in FY2020 to \$0.29 in FY2024. Earnings per share (EPS) has also trended upward over the same period, reflecting the company’s solid operational execution.

Comprehensive Income Statement Highlights

Profitability and Credit Metrics

• Return on Common Equity: 18.52% (FY24), down from 25.48% in FY21
• Operating Margin: 9.18% (FY24)
• Net Income Margin: 7.67% (FY24)
• Total Debt/EBIT: 1.50 (FY24), improved from 3.16 (FY22)
• Net Debt/Equity: 0.13 (FY24)
• EBIT to Interest Expense: 11.13x (FY24)

Comparative Valuation: Key Peers

A detailed comparative analysis of TTI against leading peers highlights its competitive position in key valuation metrics.

ESG and Corporate Governance Updates

TTI’s ESG rating was upgraded in August 2025, primarily due to improvements in corporate governance. No directors received over 10% negative votes at the 2025 AGM, reflecting reduced investor opposition. The company leads most industry peers in cleantech initiatives but trails in staff management. TTI’s business ethics are rated average among global peers.

Potential Catalysts and Investment Risks

Key Catalysts:

• Accelerated market share gains and increases in average selling prices.
• Faster-than-expected replacement cycle for power tools.
• Stable raw material costs and favorable FX movements.

Key Risks:

• Weaker-than-expected US consumer market impacting power tools and floor care sales.
• Slower new product launches, affecting revenue and margin growth.
• Rising commodity prices and CNY strength, eroding margins.

Company Overview: Brands, Operations and Global Reach

Founded in 1985, TTI operates across two main segments: power equipment, accessories and hand tools, and floor care and appliances. Its brands—Milwaukee, Ryobi, AEG, Dirt Devil, Vax, and Hoover—are well-established globally, serving both DIY users and professionals. The company also licenses the “Rigid” brand from Emerson and maintains manufacturing and R&D facilities across Asia, Europe, and North America.

Conclusion: Mid-Term Growth Intact, Value Opportunity Remains

While TTI faces near-term headwinds from tariffs and macro uncertainty, its strong balance sheet, innovation pipeline, and strategic supply chain adjustments position the company for renewed acceleration from FY26 onward. With a resilient product portfolio, robust North American presence, and ongoing margin improvement initiatives, TTI remains a compelling investment opportunity for medium-term investors.

Broker Rating Summary

• BUY rating: Total expected returns (excluding dividends) in excess of 10% based on the current price.
• Fair Value Estimate: HKD 139.00 (revised up from HKD 136.00).
• Positive outlook supported by product upgrades, mix optimization, and anticipated interest rate cuts, which could boost demand in the construction and housing sectors.