China and the United States have reached the first phase of the trade agreement
The United States will phase out additional tariffs on Chinese products and cancel the new tariffs yesterday (15th) in exchange for China’s purchase of a large number of US agricultural products. Techtronic Industries (00669), with North America as its main sales market, is expected to benefit from the temporary “ceasefire” of the Sino-US trade war, which will continue to grow in the future.
Techtronic is the world’s leading company in wireless power tools, accessories, hand tools, outdoor gardening tools and floor care products
In the first half of this year, the turnover increased by 8.7% year-on-year to $ 3.728 billion, a record high for the tenth consecutive first half. Among them, the North American market accounted for 76.3% of the turnover; gross profit margin widened 0.5 percentage points to 37.6%, and continued to reach a new high; net profit increased 11.9% to 285 million US dollars.
In fact, I & T has changed its production capacity plans to Vietnam, the United States and Mexico since the second quarter, with the goal of eliminating the impact of China-US trade tariffs next year.
It is estimated that the US, European, Vietnamese, and Mexican factories, and the outsourced floor care division in ASEAN, will be responsible for supplying the US market, which accounts for 60% to 65% of total sales in the future.
Goldman Sachs expects that global wireless tools will increase from 43% to 65% in 2021
I & T will benefit from this growth trend and the improvement of the US business and residential investment environment, driving its global market share from 12% It will increase to 14% in 2021, and it is estimated that the compound annual growth rate of earnings per share from 2019 to 2021 will reach 21%.
It can be seen that Techtronics has long had a contingency plan on tariffs, and the Sino-US trade war has temporarily ceased. It is expected that future performance can continue to grow and it is expected to drive the stock price to continue to break the top.