Daiwa expressed confidence in TECHTRONIC IND's (00669) profit growth prospects over the next two to three years. This optimism is primarily driven by strong demand for the company's Milwaukee brand, the elimination of certain one-time costs by 2025, and a clear roadmap for margin expansion. The firm increased its target price for the stock from HK$120 to HK$143, reiterating a "Buy" rating.

Daiwa anticipates that between 2026 and 2027, TECHTRONIC IND will achieve operational leverage through savings in selling, general, and administrative expenses. This is expected to help the company reach its internal EBIT margin target of 10% by 2027.

Notably, TECHTRONIC IND has disclosed the end-market mix for its Milwaukee brand for the first time, revealing that approximately 15% of its revenue comes from data center construction. Management highlighted that faster-growing non-U.S. markets, along with technology, energy, and manufacturing solutions—which together account for 32% of Milwaukee's end-market—are conducive to margin improvement. This positions the company well for further margin expansion in the future.