bocom intl released a research report stating that considering the current industry valuation is at a level of one standard deviation below the three-year average, the target price of hengan int'l (01044) is lowered to HKD 27.01, and the rating is downgraded to 'neutral'. Due to increasing competition and short-term uncertainty in revenue growth, the bank has lowered its earnings per share expectations.
The report states that in the second half of the year, the company will continue to face pressure on revenue growth due to competition and continuous investment in promotion expenses. With the continuous decline in raw material costs and the positive feedback from high-end products, it is expected that the gross margin will continue to improve in the second half of the year. In the first half of 2024, Hengan's sales decreased by 3% year-on-year, and the gross margin expanded by 2.2 percentage points to 33.3% due to the increase in high-end product revenue and the decline in raw material costs, with a net profit margin of 11.9%. It distributes a mid-term dividend of RMB 0.7 per share, with a dividend ratio of 56.7%.
