The Zhitong Finance App learned that Citibank released a research report saying that it lowered the target price of Hengan International (01044) from HK$36.2 to HK$30.5. Its sales, general and management expenses are expected to increase by 15% in the first half of this year. It is estimated that net profit will drop 11%. Core net profit is expected to decrease by 21%, and the rating remains “neutral.”

The bank estimates that the company's toilet paper business will maintain a strong momentum starting in FY2022, with related sales increasing 22% in the first half of 2023. Due to intense price competition, sales growth in the second quarter should slow quarterly. It is also estimated that the company's sanitary napkin sales will increase by 1% and diaper sales by 2% in the first half of the year. The gross margin of toilet paper is expected to drop to 18% year-on-year and semi-annual, due to the fact that the cost of pulp rose about 30% year-on-year in the second quarter of 2023 and more intense price competition. The gross margin of diapers increased slightly to 36% year over year.