Hengan (01044.HK) 1H2022 sales growth above market expectation, gross margin is expected to remain under pressure November 16, 2022 96

PSR Recommendation: ACCUMULATE Status: Initiation
Target Price: HKD37.90

Company Profile
Hengan founded in 1985, is a famous manufacturer of household paper and maternal &
child hygiene products. The market shares of the three leading products, namely women’s
sanitary napkins, baby diapers, and household tissues, is among the best in the domestic
1H2022 sales bucked the trend and achieved growth of over 10%
For the six months ended 30 June 2022 (1H2022), Hengan’s revenue increased by about
12.3% to RMB11,200.021mn, above market expectation. During the period, operating profit
fell about 25.8% to RMB1885.753mn (1H2021: RMB2540.583mn). Although the Hengan’s
sales bucked the trend and achieved growth of over 10%, the striking depreciation of the
RMB against the US dollar and HK$ during the period resulted in a significant foreign
exchange loss in the Hengan’s operations (RMB367.797mn). Therefore, profit attributable to
shareholders was RMB1,276.191mn (1H2021: RMB1,860.292mn), representing a decrease
of 31.4% YoY. If deducting the operating foreign exchange loss, profit attributable to
shareholders decreased by 10.9% YoY instead. Basic EPS was RMB1.098 (1H2021:
RMB1.574), with an interim dividend decreased by 30% YoY to RMB0.70 per share (1H2021:

About the author

Profile photo of Eric Li

Eric Li

李浩然先生(Eric Li) 高級分析師 現任現為輝立証券持牌高級分析師,曾任職股票基金、家族辦公室及證券公司等,擁有多年的證券研究部門從業及投資經驗,並先後於香港最暢銷的財經媒體撰寫投資專欄。畢業於香港理工大學電子計算系。 Eric is currently a licensed research analyst at Phillip Securities. Prior to joining Phillip Securities, he has years of equity research and investment experiences in asset management company, family office and securities company. Meanwhile, he has written investment columns in Hong Kong`s best-selling financial media for years. He holds Bachelor of Arts in Computing from The Hong Kong Polytechnic University.

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