PE 44; EPS growth 25% ? Not vested
DJ MARKET TALK: Still "Years Of High Growth" For Hengan - GC
1219 [Dow Jones] STOCK CALL: GuocoCapital keeps Hengan International (1044.HK) at Buy, target price of HK$62.39 based on 30X FY10 P/E; notes Hengan shares recently corrected from all-time high of HK$60.00 hit Dec. 1, offers buy chance for long-term investors.
Believes release of FY09 results will be re-rating catalyst, due to sequential sales, gross margin improvement in 2H09, which driven by better economy, new product launch, product mix upgrading.
Tips still "years of high growth" ahead, especially in rural areas where disposable income rose faster, disposable paper penetration rate much lower, with company dominating mid/low-end disposable paper market, has extensive distribution channel to cover such areas.
As 60%-70% of Hengan's revenue comes from non 1st-tier cities, "we believe the company will be a key beneficiary from favorable government policies on rural development." Stock +0.5% at HK$51.25; HSI down 2.3%.
Source: Dow Jones Newswire