CHERVON (02285) surged over 7%, rising 7.61% to HK$22.9 with trading volume of HK$41.15 million as of press time.

According to the CME FedWatch tool, the probability of a 25 basis point rate cut by the Federal Reserve in September stands at 98%. The market expects the Fed to cut rates by a total of 142 basis points over the next 12 months.

China Merchants Securities notes that the tool industry exhibits characteristics of "numerous SKUs, large market space, high correlation with real estate industry cycles, and fragmented market structure," with Europe and America as primary consumer markets. Currently, the U.S. real estate cycle is at the bottom, and the implementation of rate cuts is expected to initiate a new upward cycle, bringing elasticity to tool demand.

CICC pointed out that in 1H25, the company's OPE business achieved revenue of $602 million, up 22.8% year-over-year, primarily due to revenue growth from EGO products. Power tool products generated revenue of $306 million, down 2.5% year-over-year, mainly due to declining OEM business and weakness in the Chinese market. The company's comprehensive gross margin in 1H25 increased by 0.4 percentage points year-over-year to 33.3%, primarily due to increased proportion of high-margin EGO products, declining raw material costs, and rising selling prices.

KAIYUAN Securities indicated that the company's Q3 2025 revenue may face pressure but is still expected to ease in a timely manner with the rate-cutting cycle. Performance should benefit from stable gross margins and potentially resilient expense management. In 2026, EGO's strong product capabilities and channel expansion are expected to support relatively better performance, while capacity relocation may enhance certainty.