[ET Net News Agency, 23 March 2021] Citi Research cut its target price for Hengan
International Group (01044) to HK$55.1 from HK$62.9 and maintained its "neutral" rating.
The research house said Hengan's 2020 core net profit excl FX gain/loss (up 13%) came 9%
below Citi's estimates, due to 6% lower-than-expected topline, lower GPM and higher A&P.
Topline surprisingly dropped 1%, due to heavier price promotion in 2H 2020 (including the
development of new O2O channel) and continuously disappointing e-commerce performance in
2H during business model adjustment.
Management expected tissue to revert to positive growth while sanitary napkins and
diapers to grow mildly in 2021. Citi cut its 2021/22 net profits forecasts by 8-9%. It
expects earnings to decline in 2021, given lackluster revenue and potential margin
decline. (KL)