[ET Net News Agency, 23 March 2018] Nomura lowered its target price for Hengan
International (01044) to HK$90.5 from HK$92.5, and reiterated its "buy" rating.
The research house said Hengan's FY2017 net profit of CNY3,794mn (+5.5%) was slightly
above Nomura's estimate. GPM declined 1.9pp to 46.9% from 48.8%. OPM expanded to 24.5% in
FY2017.
Management noted accelerated sales momentum year-to-date. After adjusting the incentive
scheme for its Amoeba model, management targets 80% of Amoeba to achieve the FY2018 sales
target, versus around 20% in FY2017.
Nomura also expects revenue growth to accelerate to 10.2% in FY2018 from 2.8% in FY2017,
driven by 13.4% growth in tissues and 8.2% growth in sanitary napkins. It cut its
FY2018-19 net profit forecasts by 2-3%, to reflect higher revenue forecasts but lower GPM.
(KL)