Techtronic Industries stock tipped to surge in 2022
In March of this year, Asia Markets reported on Techtronic Industries’ strong 2020 results. Speaking about the results, CEO Joseph Gali, labeled the company the “Tesla of power tools”.
Since, the Techtronic Industries stock price (HKG: 0669) has actually outperformed Tesla, rising almost 80% year-to-date vs. Tesla’s year-to-date increase of around 40%.
So, how is 2022 shaping up for Asia’s largest power tools manufacturer?
“Obsession” attractive for investors
Qiao Ma is the Australian-based Portfolio Manager of the Cooper Investors Asian Equities Fund.
Ma made Techtronic Industries her top stock pick at the Sohn Hearts and Minds Investment Conference, on Friday, December 3.
Ma is believer in Gali’s vision that Techtronic will become a Tesla-like force in the power tools industry.
“Every component that goes into a Techtronic power tool product, every step of the production process has been carefully thought through to make sure they stay at the forefront of technology,” said Ma during the conference in Australia.
“Let’s use batteries as an example. As early as 2004, Techtronic migrated its entire toolset into lithium ion batteries… This is really a technology company at heart.”
Techtronic is the manufacturer behind leading global power tool brands including Hoover, VAX, Ryobi, AEG, and Milwaukee.
Unlike many other successful industrial manufacturing giants to emerge from China and Hong Kong, Techtronic Industries has resisted temptation to diversify into new areas since it listed on the Hong Kong Stock Exchange in 1990.
This is a major advantage for investors according to Ma.
“This type of obsession and focus into one thing (power tools and outdoor equipment) gives them an incredibly deep and nuanced understanding of its customers.
“They have released 500 new products in the past 12 months… The expansion can be limitless”
25% upside in the Techtronic Industries stock price
Ma believes the next 12-24 months could see the Techtronic Industries stock price rise to $HK215. At close of trading in Hong Kong on Friday, the Techtronic Industries stock price was HK$121.80.
“Techtronic is not growing sales by cutting prices and competing on volume, it’s really creating a premium end product and commanding a very healthy product margin.”
In the first half of 2021, Techtronic reported sales of US$6.4 billion, up 71% over it’s last pre-COVID interim result, which was 2019.
It’s net profit for the half came it at US$524 million, up 58% on the prior corresponding quarter.
Ma added that she is “incredibly excited” about Techtronic’s plans to broaden its sales footprint out of its core North America market and into Europe and Asia.
Techtronic’s sales in North America grew 50% in the first half of 2021, while sales in Europe grew 62% and Rest-of-World grew 50%.
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