[ET Net News Agency, 23 July 2018] Hengan International (01044) will release 1H results
on 24 August 2018. HSBC Global Research expects single digit net profit forecast for
full-year 2018, as mid-teen, top-line sales helped offset margin pressure on its tissue
products on fast-rising pulp costs.
It said growth in feminine care in 1H is likely to be slightly higher than industry
growth of 5%, driven by ASP growth.
HSBC said Hengan did not follow its peers' strategy to raise prices, and that led to
strong market share gains in tissue, especially from the online channel. From June, Hengan
started to hike tissue prices. However, HSBC believes any benefit on profit growth in the
tissue segment in 2H will be offset by slowing momentum.
Therefore, a key factor to set profit growth momentum in 2H will be the feminine care
segment, which is subject to: (1) its ability to continue premiumising its product
portfolio; and (2) whether its competitors can take advantage of the online channel to
gain share from Hengan.
The research house maintained its "hold" rating unchanged, with a target price of
HK$75.7. (KL)