[ET Net News Agency, 27 March 2020] Nomura lifted its target price for Hengan
International (01044) to HK$63.2 from HK$57.4 and upgraded its rating to "neutral" from
"reduce", backed by strong demand for personal care items from growing hygiene awareness.
The research house said both Hengan's FY2019 revenue and net profit beat Nomura's
estimates. GPM (gross profit margin) expanded 0.4pp to 38.6%, benefiting from lower wood
pulp prices, though partially offset by the growing contribution from the lower-GPM "other
business" segment. OPM (operating profit margin), however, contracted by 1.2pp, mainly due
to a higher SG&A ratio (+3.1pp).
Nomura believes Hengan should be able to maintain a 10% growth of the tissue business in
FY2020, driven by growing awareness about personal hygiene, but it could continue to lose
share to Vinda (03331) in the category. (KL)