[ET Net News Agency, 5 June 2020] Morgan Stanley lifted its target price for Hengan
International Group (01044) to HK$78 from HK$72 on the assumption of better sales growth
in sanitary napkins and maintained its "overweight" rating.
The research house expects Hengan to deliver 15-20% earnings growth in 1H. Sales
recovery is on track in 2Q, partly due to channel restocking, new products, online, and a
lower base. Net, Morgan looks for 3% sales growth in 1H (sanitary napkins +4%, diapers
+2%, tissues +1%). It expects GPM to expand 3.6ppt and the opex ratio to be flattish.
Morgan thinks earnings growth should be strong in 2020 due to sales recovery and cost
tailwinds, as pulp price remains weak. (KL)