20150803-DBS_Group-Refer_to_important_disclosures_at_the_end_of_this_report_12页_494kb
报告摘要
Hengan International Summary (August 3, 2015)
Core Content
Hengan International is a leading manufacturer of personal hygiene products, including sanitary napkins, disposable diapers, and tissue paper. It operates under well-known brands in China such as HeartTex, Anerle, and Secret. The company has a strong distribution network and is focused on enhancing sales growth and profitability by launching high-end products and improving its market position.
Key Financials
- Last Traded Price: HK$85.70
- Price Target: HK$87.50 (2% upside from current price)
- Market Capitalization: HK$104,932 million (US$13,534 million)
- Issued Capital: 1,224 million shares
- Free Float: 63.1%
- 3m Avg. Daily Valuation: US$24.6 million
Forecasts and Valuation
| Metric | 2013A | 2014A | 2015F | 2016F |
|---|---|---|---|---|
| Turnover (HK$ m) | 21,186 | 23,831 | 25,475 | 28,293 |
| EBITDA (HK$ m) | 5,791 | 6,502 | 7,013 | 7,871 |
| Pre-tax Profit (HK$ m) | 5,016 | 5,343 | 5,715 | 6,415 |
| Net Profit (HK$ m) | 3,721 | 3,916 | 4,222 | 4,734 |
| EPS (HK$) | 3.02 | 3.19 | 3.45 | 3.87 |
| EPS Growth (%) | 5.6 | 5.5 | 8.1 | 12.1 |
| PE (X) | 28.3 | 26.9 | 24.9 | 22.2 |
| P/Free CF (X) | 27.3 | 20.9 | 22.2 | 17.3 |
| EV/EBITDA (X) | 18.1 | 16.0 | 14.7 | 12.9 |
| Net Dividend Yield (%) | 2.2 | 2.2 | 2.6 | 2.9 |
| P/Book Value (X) | 6.4 | 5.9 | 5.4 | 4.9 |
Investment Thesis
Rationale
- Margin Improvement: Benefit from falling raw material prices (crude oil and wood pulp), which account for ~41% of total sales.
- New Product Launches: Expected to boost top-line growth with products such as "Red Happiness" (红悦) tissue paper and upgraded diaper lines.
- Market Position: Strong market share in high-end consumer staple products, which are more resilient to economic slowdowns.
Risks
- Slow Economic Growth: Affects mid- to low-end product sales, such as panty liners and low-end diapers.
- Intense Competition: Potential for price wars that could reduce margins.
- Product Acceptance: Risk that new products may not gain consumer traction.
1H15 Results Preview
- Revenue Growth: Expected to be low-teen (~6.9%) due to weak performance in mid- to low-end products.
- Gross Margin: Improved by 2.3ppts to 47.2% due to lower raw material costs.
- Net Profit Growth: Projected to grow by 13% to HK$2 billion.
2H15 Outlook
- Revenue Growth: Expected to improve to 12.7% due to increased promotional efforts and new product launches.
- Margin Stability: Operating margin is expected to remain stable as gross margin improvements are offset by higher marketing expenses.
- Sanitary Napkins: Expected to see accelerated growth in 2H15 due to inventory restocking and new product launches.
- Diapers: Expected to grow by 9% in 2H15 with enhanced product features and performance test results.
- Tissue Paper: Expected to grow by 13% in 2H15, with improved gross margins due to lower wood pulp prices.
Segmental Breakdown
| Segment | 2015F Revenue (HK$ m) | 2016F Revenue (HK$ m) |
|---|---|---|
| Tissue | 11,172 | 11,898 |
| Sanitary Napkins | 8,579 | 10,260 |
| Disposable Diapers | 3,181 | 3,450 |
| Food & Snack | 1,581 | 1,644 |
| Others | 962 | 1,039 |
| Total | 25,475 | 28,293 |
Income Statement Highlights
- Pre-tax Profit: Projected to grow from HK$5,016 million in 2014 to HK$5,715 million in 2015.
- Net Profit: Expected to increase from HK$3,916 million in 2014 to HK$4,222 million in 2015.
- EPS Growth: Expected to grow from HK$3.19 in 2014 to HK$3.45 in 2015.
- Net Profit Margin: Expected to remain stable at ~16.6% for 2015.
Balance Sheet Highlights
- Net Fixed Assets: Increased from HK$10,937 million in 2012 to HK$12,345 million in 2016.
- Cash & ST Invts: Declined slightly to HK$19,213 million in 2016.
- Inventory: Expected to increase slightly to HK$4,810 million in 2016.
- Debtors Turn (avg days): Improved from 112.6 days in 2014 to 46.1 days in 2016.
- Creditors Turn (avg days): Improved from 107.2 days in 2014 to 98.4 days in 2016.
- Current Ratio: Improved from 1.6 in 2014 to 1.8 in 2016.
- Quick Ratio: Improved from 1.4 in 2014 to 1.5 in 2016.
- Net Debt/Equity: Remained at CASH in 2015 and 2016.
Cash Flow Highlights
- Net Operating CF: Expected to increase from HK$4,728 million in 2015 to HK$6,054 million in 2016.
- Free CFPS: Expected to increase from HK$0.29 in 2015 to HK$3.88 in 2016.
- Capital Expenditure: Expected to remain stable at HK$1,300 million in 2015 and 2016.
Peer Comparison
| Company | PE 15F | PE 16F | EPS Growth 15F | EPS Growth 16F | P/Bk 15F | P/Bk 16F | ROE 15F | ROE 16F |
|---|---|---|---|---|---|---|---|---|
| Hengan* | 24.9 | 22.2 | 8.1 | 12.1 | 5.4 | 4.9 | 22.8 | 23.3 |
| Vinda International | 26.3 | 22.0 | 19.5 | 19.5 | 3.3 | 2.9 | 13.0 | 13.7 |
| China Mengniu* | 19.5 | 17.1 | 12.9 | 13.8 | 2.2 | 2.0 | 11.9 | 12.3 |
| China Yurun Food* | n.a. | 33.6 | (115.6) | n.a. | 0.3 | 0.3 | (0.1) | 0.8 |
| Gome* | 12.9 | 11.7 | 6.0 | 10.1 | 1.0 | 0.9 | 7.8 | 8.2 |
| Li Ning* | 467.9 | 18.1 | n.a. | 2484.4 | 2.0 | 1.8 | 0.5 | 10.4 |
| Daphne* | 17.3 | 10.5 | (19.3) | 64.7 | 0.5 | 0.5 | 2.8 | 4.5 |
| Tingyi* | 23.5 | 21.5 | 13.9 | 9.5 | 3.3 | 3.0 | 14.4 | 14.6 |
| Qingdao 'H'* | 22.6 | 21.4 | (1.9) | 5.4 | 2.6 | 2.4 | 12.2 | 11.8 |
Analysts
- Patricia YEUNG: +852 2863 8908 | patricia_yeung@hk.dbsvickers.com
- Tony WU CFA: tony_wu@hk.dbsvickers.com
Conclusion
- Rating: HOLD
- Reason: Despite margin improvements and new product launches, the company is expected to experience low teens earnings growth in 2015 due to the sluggish Chinese economy. The valuation is at the low end of its historical PE range, and no strong re-rating catalysts are anticipated.
- Target Price: HK$87.50 based on 23x 12-month rolling PE.
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