Nomura maintains Buy on Techtronic Industries and raises target price to HKD163

Overview

This is a company research / earnings preview report by Nomura on Techtronic Industries Company Limited (0669.HK). The report's core conclusion is that Techtronic Industries' Milwaukee brand growth momentum remains strong, and together with the start of the replacement cycle, distributor restocking, AI data center demand, and growth in non-Home Depot channels, the company's earnings outlook for 2026/27 is improving.

Core views

Nomura expects Techtronic Industries' 1H26F earnings to grow 11.2% YoY. Key drivers include: U.S. data center construction spending grew 22.1% YoY in January-May 2026; after the sales peak in 2020-21, replacement demand may gradually emerge based on an estimated 5-7 year replacement cycle; and Milwaukee, as a high-margin brand, is estimated to hold about 48-49% share in Home Depot's power tool sales. Meanwhile, Home Depot's share of Techtronic Industries' total sales declined from 48.9% in 2020 to 45.4% in 2025, reflecting faster growth in non-Home Depot channels, data centers, and overseas markets.

Analysis framework

The report analyzes channel inventory, industry research, sales cycles, brand mix, regional growth, and valuation multiples. On the revenue side, it focuses on replacement, restocking, AI data centers, and overseas channels; on the profit side, it focuses on gross margin and net margin improvement from resource concentration on Milwaukee and Ryobi; on the valuation side, it uses forward P/E multiples and rolls over to 2027F EPS.

Methodology notes

• Valuation methodsForward P/E valuation

  24x 2027F P/E

  The target price of HKD163 is based on 2027F EPS of USD0.87 and 24x 2027F P/E, corresponding to about +1.7 standard deviations above the historical average P/E of about 15x.

• Earnings forecastEPS forecast revision upward

  2026/27F EPS raised from USD0.74/0.84 to USD0.76/0.87

  The upward revision mainly reflects replacement demand, restocking, demand from non-Home Depot channels, and mild gross margin improvement from focusing on core brands.

• Relative ratingNomura equity rating system

  Buy indicates expected outperformance versus the benchmark over the next 12 months

  The report maintains a Buy rating, with the benchmark index being the Hang Seng Index.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 0669.HK

  Covered stock

  Strengths

  Strong Milwaukee brand momentum, high share in the Home Depot channel, faster growth in non-Home Depot channels, data centers, and the European market, and a focus on Milwaukee and Ryobi that helps improve long-term net margin.

  Weaknesses

  Sensitive to U.S. housing, construction activity, raw material costs, and supply chain expenses; valuation is already above the historical average.

  Comparison

  Target price valuation is 24x 2027F P/E, above the historical average of about 15x; currently trading at 18x 2027F P/E.

  Risks

  U.S. housing market weaker than expected, insufficient construction investment, slower-than-expected gross margin expansion, and rising raw material costs and supply chain-related expenses.

• Home Depot

  Important channel customer

  Strengths

  Techtronic Industries is estimated to have about 48-49% share in Home Depot's power tool sales, and the peak sales season and new product launches may drive 4Q26 sales.

  Weaknesses

  Home Depot's share of Techtronic Industries' total sales fell from 48.9% in 2020 to 45.4% in 2025; channel concentration still warrants attention, though it has relatively declined.

  Comparison

  Non-Home Depot channels, data centers, and overseas markets are growing faster.

  Risks

  If Home Depot inventory or end demand is weaker than expected, the restocking pace may be affected.

Key data

• RatingBuyNomura maintains a Buy rating.
• Target priceHKD163Raised from HKD140 to HKD163.
• Current priceHKD125.50Price date is 2026-07-14.
• Implied upsideApproximately 29.9%Calculated based on target price of HKD163 and current price of HKD125.50.
• 1H26F earnings growth forecast11.2% y-ySupported by data centers, replacement demand, and Milwaukee's share advantage.
• 2026F EPS forecastUSD0.76Previous forecast was USD0.74.
• 2027F EPS forecastUSD0.87Previous forecast was USD0.84.
• Valuation multiple24x 2027F P/EValuation basis for the target price.
• Current valuation18x 2027F P/EThe report states the stock is currently trading at 18x 2027F P/E.
• Market capUSD29,271.9mnMarket Cap disclosed in the report.
• 3-month average daily turnoverUSD85.3mn3-mth ADT disclosed in the report.
• Free float74.3%Freefloat disclosed in the report.

Impact & implications

The investment implication of the report for Techtronic Industries is positive: if the replacement cycle, 4Q26 peak-season sales, and distributor restocking materialize, while Milwaukee continues to expand outside the U.S. and through non-Home Depot channels, the company's revenue and margins will gain further support. Rolling valuation over to 2027F while maintaining a multiple above the historical average indicates that Nomura believes the current brand quality and growth visibility can support a valuation premium.

Risks

• The U.S. housing market is weaker than expected, leading to lower-than-expected construction activity and tool demand.
• Gross margin expansion is slower than expected, especially if brand mix improvement falls short during 2026/27F.
• Rising raw material costs and supply chain disruption-related expenses.
• If 4Q26 end demand, the peak sales season, and new product launches underperform expectations, the restocking thesis may weaken.
• A valuation multiple above the historical average requires continued delivery of upward earnings revisions and brand momentum.

What to watch

• Whether 1H26F earnings come close to the report's expected 11.2% YoY growth.
• Whether overall end sales in the power tool industry achieve more than 10% YoY growth in 4Q26F.
• Home Depot inventory levels and the pace of distributor restocking in 3Q26F.
• Milwaukee's share expansion in Home Depot and overseas markets such as Europe.
• Whether Techtronic Industries delivers gross margin and net margin improvement after focusing on Milwaukee and Ryobi.
• U.S. housing and construction activity data, and trends in data center construction spending.