China's Precision Tsugami H1 profit rises on increased 3C, AI liquid cooling demand

Overview

• China CNC machine tool maker's interim revenue rose 21% yr/yr on strong 3C, AI demand

• Net profit for the period rose 32% yr/yr, with improved gross and net margins

• Company declared interim dividend of HK$0.9 per share for the half-year

Outlook

• Company expects external tariff pressures and geopolitical disruptions to remain sources of volatility

• Precision Tsugami sees solid medium- and long-term fundamentals for China's precision machining sector

• Company anticipates demand growth in 3C, AI liquid cooling, and humanoid robot segments

Result Drivers

• 3C AND AI SECTORS - Co said strong demand from 3C and AI liquid cooling industries drove revenue growth and offset weaker automotive demand

• PRODUCT MIX AND COST CONTROL - Higher-margin precision models and cost reduction measures improved gross and net margins

• PRICE COMPETITION - Co adopted targeted pricing on strategic models to maintain customer loyalty amid intense domestic competition

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 5 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the industrial machinery & equipment peer group is "buy"

• Wall Street's median 12-month price target for Precision Tsugami (China) Corporation Ltd is HK$72.00, about 96.2% above its November 11 closing price of HK$36.70

• The stock recently traded at 8 times the next 12-month earnings vs. a P/E of 12 three months ago

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)