Hengan is about to announce its interim result for FY2019. We expect the tissue business
will meet the market expectation, but the performance of the sanitary napkin business
may be disappointing. This is mainly due to the unsatisfactory performance of the
traditional channel which accounts for more than 70% of the sanitary napkin business
revenue. Hengan has continued to increase the direct sales ratio through its amoeba teams.
But the adjustment has affected the sales performance of the channel. The amoeba
attainment rate is also lower than last year`s 50%, but the situation is expected to
improve in 2H of the year. Besides, the business will be repositioned as a premium
personal hygiene business, with new product lines including cotton pads, make-up
removers and facial masks will be launched recently.