Hengan (1044.HK) Sanitary napkin business is expected to improve in 2H, ecommerce and other businesses grow fast August 6, 2019 52

PSR Recommendation: BUY Status: Maintained
Target Price: HKDHKD70.60

Investment Summary
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.

About the author

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Tracy Ku
Investment Analyst

Graduated from Chinese University of Hong Kong, majoring in Economics for Bachelor Degree, and Journalism for Master Degree. Worked in financial news industry for more than four years.
Currently cover retailing, property sectors and IPOs. Good at analysis for the companies with economic policies and industry prospects.

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