Margin pressure expected to continue in FY22F
? Hengan reported a revenue drop of 7.1% yoy to Rmb20.8bn in FY21, and a net profit drop of 28.8% yoy to Rmb3.3bn, below our expectations, because of lower sales and higher wood pulp prices, which hurt margins.
? Tissue sales are expected to grow by the mid-single digits yoy in FY22F, but the margin will continue to be under pressure, as the wood pulp price is expected to remain high, given the uncertain international situation and high shipping costs.
? Sanitary napkin revenue is expected to grow by mid- to high-single digits yoy in FY22F, and diaper sales are expected to be flattish as of FY21.
? Reiterate Hold with a new DCF-based TP of HK$38.2.