The Zhitong Finance App learned that Daiwa released a research report stating that it maintains the “buy” rating of Chuangke Industrial (00669) and believes that after a difficult year in 2022, revenue and profit growth will accelerate again this year, with a target price of HK$120. The company's profit for the second half of last year fell 13% year-on-year to US$499 million, lower than the bank's and market expectations of 3% and 12%.

According to the report, although the overall environment is challenging, the revenue of the Milwaukee brand increased 22% year-on-year to 8.1 billion US dollars in local currency terms last year. For the first time, the Group disclosed the revenue performance of its aftermarket battery business, which increased 32% year-on-year to US$1.3 billion, accounting for about 10% of the Group's overall revenue. The gross margin of the battery business in the aftermarket is higher than that of Milwaukee products, driving the Group's gross margin expansion.

The bank said it is confident in the professional tools market this year, and at the same time notes that the consumer market situation may be better than market expectations, especially in the second half of the year. Overall, the bank estimates that I&T's revenue will grow 7% to 9% per year during the 2023-25 period. Based on the shift in revenue mix to Milwaukee, the gross margin continued to expand to support double-digit profit compound annual growth rate (CAGR).