[ET Net News Agency, 22 March 2021] Nomura cut its target price for Hengan
International (01044) to HK$47.6 from HK$49.1 and reiterated its "reduce" rating.
The research house said Hengan's FY2020 revenue missed Nomura's forecast by 3%. The rise
in wood pulp and petrochemical prices from 2H led to an HoH 3.6pp retreat of GPM to 40.5%
in 2H.
Nomura believes FY2020 results would be uninspiring if the exchange gains of RMB321.8mn
(exchange loss of RMB81.6mn in FY2019) are excluded, with adjusted net profit up a mere
7.1%, below Nomura's estimate by 9%.
With Nomura's projected sales/earnings growth forecast of 4.4%/0.9% for FY2021,
negatively impacted by rising raw materials and higher A&P expense as the company
continues to penetrate into e-commerce, the research house said the growth profile remains
unattractive. (KL)