<Earnings first take> Hengan International (1044 HK) 1H22 results saw net profit down 31.4%, below market expectations
- Hengan reported 1H22 revenue of RMB11,200m, up by 12.3% y-o-y
- 1H22 gross profit showed slight increase of 0.3% y-o-y to RMB3,942m, while prices of pulp and petrochemical materials linger at a high level YTD, GP margin showed 4.2ppts y-o-y decline to 35.2% (1H21: 39.4%)
- Net profit declined by 31.4% to RMB1,276m while the net profit margin dipped by 7.3ppts from the previous year to 11.4%
What’s New
- Hengan reported 1H22 revenue of RMB11,200m, up by 12.3% y-o-y. Tissue segment accounted for RMB5842.6m of revenue, a rapid increase of 25% y-o-y, representing 52.2% of the Group’s total revenue; Sanitary napkins segment increased by 3.3% to RMB3128.5m, representing 27.9% of Group’s total revenue; Baby diapers segment up by 2.2% to RMB633.5m, representing 5.7% of Group’s total revenue.
- E-commerce development maintained a strong momentum, and the sales scored over 30% y-o-y to approximately RMB2.7b (1H21: RMB2.0b), accounting for about 24.2% of the overall sales (1H21: 20.1%).
- 1H22 gross profit scored 0.3% increase to RMB3,942m. While prices of pulp and petrochemical materials linger at a high level YTD, GP margin showed 4.2ppts y-o-y decline to 35.2% (1H21: 39.4%). In terms of segmental performance: gross margin of tissue segment, sanitary napkins segment, and baby diapers segment, scored 23.1% (1H21: 29.2%), 65.3% (2020: 70.0%), 35.3% (2020: 36.2%), respectively.
- Operating profit scored around 25.8% decrease to RMB1885.7m, with an operating margin of 16.8% (1H21: 25.5%).
- Net profit declined by 31.4% to RMB1,276m while net profit margin dipped by 7.3ppts from the previous year to 11.4%.
- The Board proposes the payment of a final dividend of RMB0.7 per share (1H21: RMB0.7).
- We currently have a HOLD rating over the counter.
- More to follow after the company’s result briefing to be held at 4pm today.
