Hengan International 1044

Re: Hengan International 1044

Postby winston » Mon Jan 23, 2017 10:15 am

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Likely stronger-than-expected 2H16 operating profits and accelerated sales in 2017

We expect 2H16 operating profit to increase by 3%, better than our previous expectation of -5% as the YoY GPM improvement is
enough to offset higher SG&A expenses on marketing spending. We expect sales to increase by 4% in 2H16, in line with 1H16.

We expect sales to accelerate to high single digit in 2017E (2016E +4%) on:
(1) e-commerce acceleration,
(2) sales team restructuring,
(3) launch of a high-end sanitary napkin product and
(4) stabilising diaper sales on strong birth rate in 2016/17E.

We believe the potential petorchem increase can be largely offset by
(1) SG&A cost savings after the launch of the new SAP system,
(2) reduction in promotion expenses and
(3) product mix upgrade and the launch of a high-end sanitary napkin product.

We raise our 2016E/17E earnings by 2%/6% to reflect better 2H16E operating profit and SG&A cost savings in 2017, and raise TP to
HK$77.

Hengan trades at 17x 2017E P/E, a historical low and a 10% discount to the staples sector.

We see sales acceleration in 2017 to be key share price catalysts. The 1.3% stake hike by management in the past 3 months may suggest higher confidence in 2017.

Source: CS
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Re: Hengan International 1044

Postby winston » Fri Feb 17, 2017 2:17 pm

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<Research Report>M Stanley Upgrades HENGAN INT'L (01044.HK) to Overweight with Target Lifted to $80

Morgan Stanley, in its report, said HENGAN INT'L (01044.HK)'s reforms have become an overlooked driver which could raise the growth trajectory for the next few years, and therefore trigger a re-rating.

Morgan Stanley estimated 8% and 9% sales growth and 4% and 13% earnings growth for 2017 and 2018, respectively, which are higher than consensus' mid-low single digits sales and earnings growth.

The broker expected Hengan's sales growth to accelerate from as early as 2H17.

The broker lifted the share price of Hengan from $66.9 to $80, and upgraded it from Equalweight to Overweight.

Source: AAStocks Financial News
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Re: Hengan International 1044

Postby winston » Mon Feb 20, 2017 1:33 pm

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<Research Report>C Suisse Lifts HENGAN INT'L (01044.HK) Target to $80.8; Kept Outperform

Credit Suisse, in its report, said HENGAN INT'L (01044.HK)'s sales channel reform is rolling out ahead of schedule, given stronger sales results and cost efficiency at the testing cities.

The chairman is fully in charge of the new channel reform in 2017 leading to strong execution. The broker expected sales growth to accelerate in 2017 on channel reform, aggressive e-Commerce penetration and the launch of high-end sanitary napkin products.

The broker believed that raw material pressure is under control by product mix enhancement, lower promotions and cost savings after channel reform.

Pulp prices are still down 2% compared to the 2016 average and petrochem is up 5-6% at present, below the 16% yearly increase (Credit Suisse forecast).

The broker raised 2017 forecasts by 2% and its target price from $77 to $80.8 on a stronger sales outlook and better cost efficiency, with rating Outperform.

At 17x 2017 P/E, Hengan trades at 15% below the China staple average and close to its historical low, but earnings are expected to accelerate.

Source: AAStocks Financial News
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Re: Hengan International 1044

Postby winston » Tue Mar 21, 2017 2:25 pm

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<Post-Result>HENGAN INT'L Fall Widens to 5% after Midday; 2016 Net Profit Up 10.3%

During the noon break, HENGAN INT'L (01044.HK) announced that its 2016 net profit rose 10.3%.

After midday, it fell below 250-day MA ($65.96) and once fell to $64.05; it last traded at $64.15, down 5%, being the weakest performer among blue-chips, on rising volume of 3.1 million shares.

The decline cleaned the slate of four days of increase.

HENGAN INT'L announced the results for the year ended December 2016. Net profit grew 10.3% yearly to RMB3.597 billion, with EPS of RMB2.967. Final dividend rose nearly 15% yearly to RMB1.1.

Source: AAStocks Financial News
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Re: Hengan International 1044

Postby winston » Tue Mar 21, 2017 3:35 pm

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<Research Report>UBS: HENGAN INT'L (01044.HK) 2016 Net Profit Misses Estimates; Revenue Growth Slows

UBS, in its report, said the 2016 revenue/net profit growth of HENGAN INT'L (01044.HK) both missed consensus forecasts.

EBIT fell 3% yearly, representing 160bps margin contraction, due to SG&A expenses increase and deleveraging impact offsetting margin benefits from cost deflations.

In 2H16, revenue growth of sanitary napkin decelerated by 5 ppts half-on-half to 4%, with EBIT margin shrinking by 480bps yearly.

The other two segments, diaper and tissue paper, also saw decelerating revenue growth in 2H16 versus 1H16.

The broker rated Sell with target price of $51.27.

UBS expected the market to respond negatively given decelerated revenue growth and earnings miss.

Source; AAStocks Financial News
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Re: Hengan International 1044

Postby winston » Fri May 19, 2017 9:19 am

Hengan back on track after decline last year

by Aylin Huang

Hengan International Group (1044), China's largest manufacturer of sanitary napkins and baby diapers, says it has no plan to raise prices and believes the price of wood pulp will remain stable in the next month and decline by July.

Sales of the company's diapers dropped more than 12 percent last year but the business has recovered this year, said chief executive Hui Lin-chit. "The operational channel was improved this year," Hui said.

E-commerce takes up 5 percent of the company's revenue and is expected to rise to 8 percent this year, said the company.

Hui said that the company had improved its sales model and established 228 operation teams. But the effect is not known yet since the change has just taken place.

Source: The Standard
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Re: Hengan International 1044

Postby winston » Wed Jun 21, 2017 7:05 am

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Credit Suisse issued a report on an underperforming stock, Hengan International (1044).

This mainland personal hygiene products maker's share price had plunged from the HK$100 level in 2015, to a seven-year low of HK$52.80 this year. Yesterday, it rose 1.2 percent to HK$58.60.

The report said the Amoeba managing model of Hengan has been fully implemented since May with positive results.

Sales in May and early-June picked up compared to the first four months. Gross profit margin remained stable in the first five months, despite raw materials costing more, thanks to better product mix and healthy inventory. Sales and general administrative expense ratio also improved slightly from 2016.

Hengan is trading at 17 times historical price-to-earnings. Credit Suisse rated it "outperform," with a target price at HK$73.50.

If this a turnaround, the share price should have a lot of potential upside.

Source: Dr Check, The Standard
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Re: Hengan International 1044

Postby winston » Mon Feb 05, 2018 11:26 am

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HENGAN INT`L(1044)

Analysis:

We highlight the company`s amoeba strategy is expected to boost sales growth and opex reduction.

For 2018, the company expects sales growth of sanitary napkins and tissue. As for baby diaper, it hopes to resume sales growth after a weak 2017 performance.

With wood pulp price climbing, there is continued pressure on GPM as experienced in 1H17. However as it raised its effective ex-factory price in Oct 2017 through fewer promotion rebates to distributors, its GPM pressure in 2H17 is likely to narrow.

Based on the current cost trend, GPM pressure will continue in 1H18 for tissue. However, management hopes that it will be offset by the lower opex to sales ratio if sales growth is in line with expectation.

Another market concern is the higher oil price based on the current trend, which might affect the cost of petroleum-related products, which are the key raw materials for sanitary napkins and baby diapers.

The management explains that rising cost is also seen in 2H17 and product mix upgrade could offset the cost increase. We expect the company annual report to be published in April.

Strategy:
Buy-in Price: $76.35, Target Price: $86.50, Cut Loss Price: $70.00

Source: Phillips
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Re: Hengan International 1044

Postby winston » Thu Dec 13, 2018 7:47 am

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Hengan International shares plunge in Hong Kong after short seller brands it ‘worthless’

China’s largest sanitary towels and baby nappies producer accused by Bonitas Research of fabricating income

Hengan has no immediate response but says, ‘The company is operating as usual’

by Yujing Liu

Bonitas Research, an Austin, Texas-based short-selling institution, claims Hengan International has fabricated a total of 11 billion yuan (US$1.6 billion) of net income since 2005 that is now reflected as fake cash on its balance sheet.

Shares of the company had dropped as much as 8.8 per cent before settling at 5.7 per cent, when the trading halt was called.

The company has orchestrated a scheme “using a web of inter-company related transactions to artificially inflate profits and conceal fake cash balances”, and firm insiders have pocketed at least 7.8 billion yuan from dividends, the report said.

The value of the stock is ultimately zero because it has taken on a staggering amount of debt, the report said.

Source: SCMP

https://www.scmp.com/business/china-bus ... -hong-kong
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Re: Hengan International 1044

Postby winston » Thu Dec 13, 2018 7:45 pm

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Hengan denies short seller claims

Hengan International (1044) has denied all of the allegations from short seller Bonitas Research, and Bonitas said that it will keep shorting the Chinese sanitary napkins and baby diapers producer.

As for Bonitas’s allegation of fabricating return on sanitary napkin assets and the sanitary napkin profitability, Hengan said that throughout the years, the company benefited from its early entry to and history of operating in the sanitary napkin segment.

Further, it benefited from its wide range of sanitary napkin products which allows a higher market penetration rate.

It said it has regularly obtained market research reports from an industry expert of repute to verify that it remained number one in terms of its sales for sanitary napkins in China which accounted for approximately 27 percent of the relevant market share.

As for the inexplicable difference in segment profitability between Hengan China and Hengan, the company explained that additional subsidiaries of Hengan run the "Space 7” branded sanitary napkin and operate in the high-end market with significantly higher profit margins.

As for the sham transactions, the company said that the intra-company trades and the related balance sheet items such as trade receivables and trade payables are eliminated on consolidation of the company and do not distort or inflate the overall financial positions of the company.

As for the allegation of laden with debt and fabricated bank balances, it said that the reason for issuing super short-term bond was that it noticed that starting from 2018, there is a general downward trend for borrowing costs in the PRC in respect of debt financing.

As of 2:00pm Hong Kong time, the blue-chip stock declined 3.59 percent, or HK$2.05, to HK$55.

Source: The Standard

http://www.thestandard.com.hk/breaking- ... r=20181213
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