DBS Group Research raised its target price for Hengan International (01044) to HK$77.2 from HK$76.51 and maintained its "buy" rating.
The research house said Hengan's e-commerce sales accounted for only 18% of its overall sales as of June 2020, indicating great growth potential compared to close peers.
In addition, high-end sanitary napkins take up only a mid-single-digit rate of its segmental sales, which should see double-digit growth year-to-date. It targets to achieve 20% segmental sales in the longer term.
DBS expects Hengan's ROE to climb from 21% in FY2019 to 26% in FY2021, underpinned by improving sales performance, high gross margin and better cost control. It raised its 2020/21/22 earnings forecasts by 2.9%/0.5%/0.2% on better opex control.
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