Investment banks back Henganby Tereza Cai 18 Dec 2018
Despite being attacked by short seller Bonitas Research last week, blue-chip Hengan International (1044) maintained its "buy" rating by investment banks, including Morgan Stanley, CICC (3908) and Nomura.
Morgan Stanley said the Chinese sanitary napkin and baby diaper manufacturer's reply was detailed and clear and its profits were reasonable.
It said that the market underestimated Hengan's capacity to generate cash flow and its stable dividend payout, and as such, was keeping its the rating of the company at "buying."
CICC (3908) pointed out that Bonitas' accusation lacked evidence, and it was convinced about the authenticity of its financial position.
It anticipated the impact of the short-selling report to wear off in a short while and kept Hengan's target price at HK$85.33.
Nomura set Hengan's target price at HK$90.20 and explained that the market had already noticed its outperforming profitability and move of issuing bonds to gain the interest spread before the short-selling report.
Nomura said that given Hengan's market-leading position, the high profitability of its sanitary napkin business is reasonable, and the bonds issues were just a way to achieve a "carry trade," which doesn't have high risks.
Source: The Standard
http://www.thestandard.com.hk/section-n ... r=20181218
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