UBS released a research report stating that considering valuation and dividend rate attractiveness, the profit forecast for 2024 to 2026 remains largely unchanged, maintaining the Hengan International (01044) “buy” rating. Due to increased competition in the three core business areas, the revenue forecast for the period was lowered by 5% to 12%. At the same time, referring to the company's stable pricing strategy, the net profit margin forecast was raised by 0.8 to 1.5 percentage points, and the target price was raised from HK$33 to HK$34.32.
According to the report, the company's revenue growth in the second half of last year was lower than the market and the bank's expectations. Among them, the revenue growth rate slowed down on a half-year basis, and weak sales growth was mainly due to the company's business strategy to control promotions and protect profits; gross margin recorded an improvement, rising from 31% in the first half of last year to 36.5% in the second half of last year; the company's marketing and advertising expenses ratio fell to 4.1%; in addition, exchange losses taking into account other earnings also narrowed to RMB 183 million.