Daiwa Securities Upgrades Rating of Parent Company of Precision Tsugami (1651.HK) to “Outperform”

HONG KONG, Sep 6, 2021 – (ACN Newswire) – Daiwa Securities, in its recently published research report, has upgraded the rating for the parent company of Precision Tsugami (China) Corporation Limited (“Precision Tsugami” or the “Company”, stock code: 1651), which is the largest foreign-owned CNC high-precision machine tool manufacturer in the PRC . The “Outperform” rating was given to the firm as Daiwa Securities was particularly optimistic about Precision Tsugami’s strong business foundation in the PRC, and the higher-than-expected number of orders received in July.

In the report, Daiwa Securities noted that Precision Tsugami brought a new plant on stream in Anhui Province, the PRC, in March 2021, thus increasing total production capacity by just above 15%. The ability to supply the needed volume of products by the deadlines demanded by customers is particularly important in the PRC. The Group commands a lofty share of the local market for small- and mid-size sliding headstock automatic lathes (60-70% by its estimate). Leveraging its strong profile, the Company has established close relations with a number of local area suppliers and appears to be well positioned when it comes to securing the parts, materials and workforce needed for business activities. At this juncture, the procurement difficulties have not had a major impact on the Company’s production. In view of the higher-than-expected number of orders in July, Daiwa Securities raised its revenue forecast for the parent company of Precision Tsugami. The forecasted revenue and operating profit for FY21 are 100.5 billion yen (HK$7.084 billion) and 20.5 billion yen (HK$1.445 billion), respectively, and 107 billion yen (HK$7.542 billion) and 21.8 billion yen (HK$1.537 billion) in FY22, respectively. Daiwa Securities believes that orders will remain at a high level. In the first quarter of FY22, Precision Tsugami accounted for 70% of the parent company’s revenue.

Since its establishment, Precision Tsugami has been committed to developing, manufacturing and selling modern CNC machine tools. Currently, it manufactures various high-end precision CNC machine tools such as automatic lathes, turret machines, machining centres and grinding machines that are used in diverse industries, spanning automotive parts, smart phones and 5G communications to automation, medical equipment and construction machinery. The Company is the largest overseas production base of Tsugami Japan. In addition to selling its products in the PRC, the Company also exports to Japan, South Korea, Taiwan, Europe, the United States and other markets.

About Precision Tsugami (China) Corporation Limited
The Group is an established foreign-owned CNC high-precision machine tool manufacturer in the PRC which primarily engages in the manufacture and sales of a wide range of CNC high precision machine tools under the TSUGAMI brands. The Group has been listed on the Main Board of The Stock Exchange of Hong Kong Limited since 25 September 2017. The Group’s CNC high-precision machine tools can be broadly classified into four major product categories, namely, precision lathes, precision machining centres, precision grinding machines and precision thread and form rolling machines. The Group offers CNC high-precision machine tools that are of standardised design and specifications to its customers and is able to provide machine tool solutions to them and make various specifications and/or customisations to CNC high-precision machine tools. According to Frost & Sullivan, in terms of revenue in 2017, the Group ranked third in the CNC high-precision machine tool industry in the PRC and was the largest foreign-owned CNC high-precision machine tool manufacturer in the PRC. The Group also ranked first in the PRC precision automatic lathe market in terms of revenue in 2017, with a market share of approximately 49.8%.

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