CHERVON (02285) saw its share price fall more than 5% during the late trading session, although the stock still recorded a cumulative gain of nearly 30% over the past five trading days. At the time of writing, the shares were down 5.26% to HK$25.6, with a turnover of HK$118 million.

On the news front, Joseph Galli Jr., the former Chief Executive Officer of Techtronic Industries (TTI), officially joined CHERVON as its new CEO on September 10, while founder Pan Longquan will remain as Chairman. HSBC believes Galli's extensive experience will bring positive effects to CHERVON, highlighting that during his tenure at TTI from 2008 to 2024, the company achieved compound annual growth rates of 9.5% in revenue and 27.7% in net profit.

HSBC noted it has revised its target price-to-earnings (P/E) ratio for CHERVON from 11 times to 14.3 times, representing a 42% discount to TTI's 24.6 times P/E ratio. This new multiple has been applied to the 2027 earnings per share forecast of 29 US cents, yielding a new target price of HK$32.5. The investment bank anticipates accelerated medium-term growth under the new CEO's leadership, with the next catalyst being Galli's presentation to investors outlining his future growth and transformation plans.