Techtronic Industries Co Ltd (00669) reported first-half results that exceeded expectations, prompting UBS to raise its earnings per share forecasts for the 2026-2028 period by an average of approximately 3%. The bank has increased its price target from HK$148 to HK$168, which corresponds to a 2027 price-to-earnings ratio of about 23 times. This valuation sits above the stock's historical trading range of roughly 15 to 20 times.

UBS believes this premium valuation is justified, anticipating stronger earnings growth from 2026 to 2028 compared to historical levels. The bank has maintained its "Buy" rating on the stock. Management highlighted that the growing demand for AI data centers is a key driver. The construction of AIDC facilities involves more complex systems, resulting in tool usage intensity that is double that of typical infrastructure projects. This, combined with a persistent labor shortage in the United States, is expected to benefit the company's business for innovative tools and solutions.

Currently, data center-related business accounts for about 15% to 20% of the Milwaukee segment's revenue, which itself contributes roughly 71% of the group's total revenue. UBS projects that sales from AIDC-related activities will see growth of over 20% in the coming years. By 2028, these sales are expected to account for approximately 20% of the group's total sales and 26% of its earnings. The bank now forecasts a compound annual growth rate of about 18% for Techtronic Industries' earnings per share from 2026 to 2028.