[ET Net News Agency, 10 April 2018] Credit Suisse lowered its target price for Hengan
International (01044) to HK$105 from HK$108, and reiterated its "outperform" rating.
The research house said its channel checks suggest Hengan's 1Q revenue maintained strong
mid-to-high teen's revenue growth, with tissue paper taking the lead. More importantly,
March revenue growth seems to have accelerated from January/February.
Acquisition of Sunway Kordis - a small acquisition but could be big for Hengan in the
long-term due to low penetration and fragmented market, Credit Suisse said.
It believes market sentiment on Hengan is improving as year-to-date revenue momentum
remains strong. Uncertainties on China-US trade war also drives investors to defensive
stocks. With a reasonable valuation at 20x 2018 P/E, Hengan seems to be a good defensive
investment in the short term market turmoil.
Credit Suisse cut its 2018/19 earnings forecast by 2-3% mainly due to the continued
margin pressure from high pulp prices, while it lifted its 2020 earnings forecast by 4% on
better revenue and margin recovery given Amoeba's positive effect. (KL)