[ET Net News Agency, 19 August 2019] Morgan Stanley lowered its target price for Hengan
International (01044) to HK$65 from HK$72 and maintained its "overweight" rating.
The research house lowered its earnings forecasts to reflect uncertainties related to
transformation in the traditional channel. However, Morgan thinks this change could
benefit the company in the long run.
Morgan expects 7% sales growth in 1H, with only 2% growth for its core HPC products
(femcare, tissue, and diapers). It thinks Hengan's transition to a direct-sales model in
traditional trade (TT) could cause short-term disruptions, especially for the femcare
business, which generated 70% of sales from TT.
It expects GPM to drop 3.6ppt in 1H, to 36%, driven by unfavorable mix shift and higher
pulp prices, and look for the opex ratio to rise 0.9ppt, to 18.1%, owing to weak sales.
Morgan expects net profit to decline of 13% in 1H. (KL)
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01044 HENGAN INT'L
Nominal 
24.500 -0.650 (-2.584%) Others
19/08/2019 14:43
{I-bank focus}Morgan lowers Hengan Int'l (01044) to HK$65
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