[ET Net News Agency, 23 November 2018] Deutsche Bank raised its target price for Health
and Happiness (H&H) International (01112) to HK$65 from HK$55 and upgraded its rating to
"buy" from "hold".
The research house noted that Premier Li Keqiang hosted an executive meeting with the
State Council on 21 November, announcing a plan to further support cross-border e-commerce
(CBEC) from 2019 onward.
DB said CBEC is a major channel for H&H's ANC (adult nutrition and care) sales in China,
and most of its products have not yet obtained registration. Accordingly, the newly
announced plan should largely remove regulation risk on H&H's ANC business.
Meanwhile, unregistered IMF (instant milk formula) will also be allowed to continue
selling through the CBEC channel after 1 January 2019. This could bring increased
competition for H&H's IMF segment. However, DB believes the impact will be limited, given
that H&H's current major channel is still offline.
DB raised its net profit forecast by 5-8% in 2019-20 to factor in the increasing
visibility of ANC sales. (KL)