Investment Rating - The report maintains a Buy rating for the company with a target price of HKD 29.40, representing a 23.0% upside from the current price [3][4] Core Views - The company maintains its leading position in the industry despite intense competition in the personal care market [2] - Revenue decreased by 3.0% to RMB 11.84 billion in H1 2024, but key upgraded and premium products grew by over 10%, and e-commerce channels grew by 6.5%, now accounting for 32% of total revenue [2] - Gross margin improved by 2.3 percentage points to 33.73%, driven by lower raw material costs and growth in premium products [2] - Operating profit and net profit attributable to shareholders increased by 11.4% and 15.0% to RMB 1.89 billion and RMB 1.41 billion, respectively [2] - The company has a strong balance sheet with RMB 5.41 billion in net cash [2] Business Performance - Tissue business revenue decreased by 3.1% to RMB 6.95 billion, with volume growing by double digits but average selling price (ASP) declining by 12% [2] - Tissue gross margin improved by 1.9 percentage points to 19.6% [2] - Sanitary napkin business revenue decreased by 2.2% to RMB 3.15 billion, with volume flat and ASP declining by 2% [2] - Sanitary napkin gross margin improved by 0.9 percentage points to 62.7% [2] - Diaper business revenue grew by 7.0% to RMB 710 million, with gross margin improving from 36.0% to 45.3%, driven by strong growth in the premium product "Q•MO" [2] Financial Projections - Revenue is expected to decline by 1.6% in 2024 to RMB 23.38 billion, but grow by 2.3% and 2.1% in 2025 and 2026, respectively [5] - Net profit is forecasted to decline by 3.6% in 2024 to RMB 2.70 billion, but grow by 5.9% and 4.4% in 2025 and 2026, respectively [5] - Basic EPS is projected to be RMB 2.33 in 2024, RMB 2.46 in 2025, and RMB 2.57 in 2026 [5] - The company's P/E ratio is expected to be 9.5x in 2024, 9.0x in 2025, and 8.6x in 2026 [5] Financial Health - The company has a strong balance sheet with a net cash position of RMB 5.41 billion [2] - Net debt ratio is expected to improve from -0.07 in 2022 to -0.48 in 2026, indicating a strong cash position [6] - ROE is projected to increase from 34.1% in 2022 to 36.0% in 2026 [6] Dividend Policy - The company has consistently paid a dividend of RMB 1.40 per share, with a dividend yield of 6.3% [1][3] - The interim dividend for H1 2024 is RMB 0.70 per share [2]
恒安国际：维持行业领先地位，24年上半年股东应占净利润增长15%