[ET Net News Agency, 4 August 2020] Nomura lifted its target price for Hengan
International (01044) to HK$79.2 from HK$63.2 and upgraded its rating to "buy" from
"neutral".
Following the logistics disruption in 1Q, the research house expects strong inventory
replenishment by distributors to drive the growth of the segment in 2Q. To recap, 1H 2019
segment sales declined 4.6%, with market share loss in 2019 as Hengan shifted to the
direct sales model to push new product sales.
Nomura expects distribution mix to normalise in 1H, alongside the strong momentum
gathered by new product launches, which should drive up segment GPM (gross profit margin)
in 1H. It expects Hengan's sanitary napkins business to at least revert back to the
mid-single-digit industry growth level in 2Q, and it expects GPM to expand 0.3pp to 70.6%
in FY2020. (KL)