Core Viewpoint - The company, known as the "King of Diapers in Africa," has successfully countered market skepticism regarding its ability to maintain a leading position in core African and other emerging markets, as evidenced by its strong annual performance report [2]. Financial Performance - The company reported a revenue growth of 24.9% year-on-year, reaching $567 million, with a net profit increase of 27.4% to $121 million [2]. - The gross profit margin improved from 35.2% in 2024 to 35.9% in 2025, indicating enhanced profitability [2]. - Sales from the core African market grew by 22.5% to $545 million, while revenue from Latin America surged by 134% to $22 million over five years [4]. Market Expansion - The company is expanding beyond Africa, seeking growth opportunities in other emerging markets, particularly in Latin America and Central Asia, where revenue has also doubled [4]. - The average selling price of its two main product lines increased by 4% to $7, with baby diapers rising by 4.4% and female hygiene products by 7% [4]. Competitive Landscape - Market skeptics draw parallels between the company and Transsion Holdings, which faced stagnation in revenue and profit in Africa due to price wars and rising component costs [5]. - Analysts note that the African personal care market is projected to grow from $3.8 billion in 2024 to $10 billion in the long term, driven by a high birth rate and low product penetration compared to developed markets [5]. Demographic Advantage - Africa's young population and rapid urbanization present an ideal market for low-cost Chinese consumer brands, which have been relatively ignored by major Western companies [6]. - The company has strategically focused on lower-income markets in East, Central, and West Africa, avoiding competition in wealthier regions like South Africa [6]. Production and Supply Chain - The company established its first factory in Ghana in 2009, which has since become the largest diaper and sanitary napkin manufacturer in Africa, with an annual capacity of 6.3 billion diapers [8]. - The localized production model provides a competitive edge over rivals reliant on imports, especially amid global supply chain disruptions [8]. Stock Performance and Valuation - Following its IPO, the company's stock price has shown resilience, trading at approximately 34.06 HKD, a 30% increase from its listing price [8]. - The current price-to-earnings ratio is around 19 times, reflecting a positive investor sentiment, especially after the recent performance improvements [9].

Investment Rating - The report maintains an "Increase" rating for the industry, indicating a positive outlook for the sector in the next six months [1]. Core Insights - The report highlights the inclusion of companies such as JD Industrial, Leshush, and Xirui in the Hong Kong Stock Connect list, while companies like Beijing Capital Airport and Fenbi were removed [4]. - JD Industrial is recognized as a leading provider of industrial supply chain technology and services in China, with a projected revenue of 23.95 billion yuan in 2025, reflecting a year-on-year growth of 17.4% [11]. - Leshush, a leading brand in Africa for sanitary products, is expected to generate revenue of $454 million and a net profit of $95 million in 2024, with a compound annual growth rate (CAGR) of 19% for revenue from 2022 to 2024 [9]. - Xirui, a pioneer in the global private aviation sector, anticipates delivering 731 aircraft in 2024, with projected revenue of $1.197 billion and a net profit of $121 million, showcasing a CAGR of 19.5% from 2020 to 2024 [10]. Summary by Sections Industry Overview - The report discusses the adjustment of the Hong Kong Stock Connect list, emphasizing the strategic inclusion of companies that are positioned for growth in emerging markets and sectors [4][9][10]. Company Performance - JD Industrial is positioned as the top player in China's MRO procurement service market, benefiting from the digitalization trend in industrial supply chains [11]. - Leshush's market share in Africa for baby diapers and sanitary napkins is 20.3% and 15.6%, respectively, indicating strong competitive positioning [9]. - Xirui's diverse revenue streams from aircraft sales, customization, and after-sales services enhance its market resilience and customer loyalty [10]. Market Trends - The report notes the significant growth potential in the industrial products circulation market in China, driven by the low digital penetration and increasing standardization of enterprise procurement [11]. - The expansion of the ultra-high-net-worth population globally is expected to structurally increase demand for private aviation services, benefiting companies like Xirui [10].

Investment Rating - The report maintains an "OUTPERFORM" rating for Softcare, with a target price of HK$35.10, representing approximately 16.2% upside potential from the current price of HK$31.26 [2][3]. Core Insights - Softcare is positioned as a leading player in the essential consumer goods market in Africa, with a dual-track model of "Localization + Distribution" that creates a competitive moat and replicable growth strategy [1][3]. - The company has established a strong foothold in the African market, with significant market shares in baby diapers (20.3%) and sanitary napkins (15.6%) [4][10]. - The report forecasts a revenue CAGR of 17.6% from 2025 to 2027, driven primarily by volume growth, with total sales expected to grow at approximately 21% [4][10]. - The company has a robust financial outlook, with net profit margins projected to average 21.2% from 2025 to 2027, despite a slight adjustment in gross margins [4][10]. Summary by Sections Financial Performance - Revenue is projected to grow from US$454 million in 2024 to US$739 million in 2027, with net profit expected to increase from US$95 million to US$155 million during the same period [2][4]. - The diluted EPS is forecasted to rise from US$0.19 in 2025 to US$0.25 in 2027 [2][4]. Market Positioning - Softcare has successfully transitioned from a trading company to a localized manufacturing giant, establishing production facilities in multiple African countries [7][8]. - The company has developed a differentiated brand matrix targeting various consumer segments, with its core brand "Softcare" positioned in the mid-to-high-end market [10][11]. Growth Strategy - The report highlights the company's strategy of leveraging its established distribution network and local manufacturing capabilities to expand into new emerging markets, including Latin America and Central Asia [4][32]. - The company has built a comprehensive distribution network with over 2,800 distribution points across Africa, Latin America, and Central Asia, enhancing its market penetration [34][36]. Product Categories - The primary revenue driver is the baby diaper segment, which contributes over 70% of total revenue, followed by significant growth in the baby pull-up pants and sanitary napkin categories [16][22]. - The sanitary napkin segment is expected to grow at a CAGR of 10.7% from 2024 to 2029, indicating strong future potential [46]. Regional Focus - The African market remains the cornerstone of Softcare's operations, contributing over 98% of its revenue, with significant growth opportunities identified in East and West Africa [28][29]. - The company is strategically expanding into Latin America and Central Asia, with revenue growth rates projected at 82.1% and 121.1% respectively for these regions [32][42].

Investment Rating - The report maintains an "OUTPERFORM" rating for Softcare with a target price of HK$35.10, representing approximately 16.2% upside potential from the current price of HK$31.26 [2][3]. Core Insights - Softcare is positioned as a leading player in the essential consumer goods market in Africa, with a dual-track model of "Localization + Distribution" that creates a competitive moat and replicable growth strategy [1][3]. - The company has established a strong foothold in the African market, with significant market shares in baby diapers (20.3%) and sanitary napkins (15.6%) [4][10]. - The report forecasts a revenue CAGR of 17.6% from 2025 to 2027, driven primarily by volume growth, with total sales expected to grow at approximately 21% [4][10]. - The company has a robust financial outlook, with net profit margins projected to average 21.2% from 2025 to 2027, despite a slight adjustment in gross margins [4][10]. Summary by Sections Financial Performance - Revenue projections for Softcare are as follows: US$454 million for 2024, US$545 million for 2025, US$636 million for 2026, and US$739 million for 2027, reflecting a growth trajectory of 10%, 20%, 17%, and 16% respectively [2][4]. - Net profit is expected to increase from US$95 million in 2024 to US$155 million in 2027, with growth rates of 47%, 24%, 14%, and 15% [2][4]. Market Positioning - Softcare has successfully transitioned from a trading company to a localized manufacturing giant, establishing production facilities in multiple African countries [7][8]. - The company has developed a differentiated brand matrix targeting various consumer segments, with its core brand "Softcare" positioned in the mid-to-high-end market [10][11]. Growth Strategy - The report highlights the company's strategy of leveraging its established distribution network and local manufacturing capabilities to expand into new emerging markets, including Latin America and Central Asia [4][32]. - Softcare's extensive distribution network includes over 2,800 wholesalers and retailers, ensuring deep market penetration across various regions [34][36]. Product Categories - The primary revenue driver for Softcare is its baby diaper segment, which contributes over 70% of total revenue, followed by significant growth in the baby pull-up pants and sanitary napkin categories [16][22]. - The company is also focusing on expanding its wet wipes product line, which complements its core hygiene products and enhances customer loyalty [27].

Investment Rating - The report initiates coverage on the company with a "Buy" rating and sets a target price of HKD 42, corresponding to a 25x PE for 2026 [1][8]. Core Insights - The company is a leading supplier of hygiene products in Africa, with the highest sales of baby diapers and sanitary pads in the region. It has a strong competitive advantage due to its long-standing presence in the market and its international expansion strategy [16][21]. - The African hygiene products market is characterized by high growth potential driven by population growth, rising incomes, and infrastructure development. The company is well-positioned to benefit from this growth [2][17]. - The company has established a diverse product matrix and a strong brand presence, allowing it to cater to various market segments from mid to high-end [3][18]. - Localized production and a global supply chain enhance cost efficiency, enabling the company to maintain a competitive edge [4][18]. - The company has a mature sales network in Africa, reaching over 80% of the local population, and plans to replicate its successful model in emerging markets like Latin America and Central Asia [5][19]. Summary by Sections Market Overview - The African hygiene products market is expected to grow significantly, with a projected CAGR of 10.7% for sanitary pads and 7.0% for baby diapers from 2026 to 2029. This growth is supported by demographic trends and increasing consumer awareness [2][17]. Competitive Positioning - The company has developed a comprehensive brand matrix with over 380 SKUs, allowing it to meet the diverse needs of different income groups in emerging markets. Its marketing strategies include local celebrity endorsements and targeted advertising [3][18]. Production and Supply Chain - The company operates factories in eight African countries, benefiting from local production to save on tariffs and utilize lower labor costs. It has established a robust global procurement network to control costs effectively [4][18]. Sales and Distribution Strategy - The company has built a strong distribution network in Africa, focusing on wholesalers and distributors to reach a wide consumer base. It aims to deepen its market presence and expand into new regions [5][19]. Financial Performance and Projections - The company is projected to achieve net profits of USD 113.24 million in 2025, with a growth rate of 19.1% year-on-year. The expected EPS for 2025 is USD 0.18, reflecting strong financial health and operational efficiency [7][12].

Investment Rating - The report initiates coverage on the company with a "Buy" rating and sets a target price of 42 HKD, corresponding to a 25x PE for 2026 [1][8]. Core Insights - The company is a leading supplier of hygiene products in Africa, with the highest sales of baby diapers and sanitary pads in the region. It has a strong competitive advantage due to its long-standing presence in the market and its international expansion strategy [16][21]. - The African hygiene products market is characterized by high growth potential driven by population growth, rising incomes, and infrastructure development. The company is well-positioned to benefit from this growth [2][17]. - The company has established a diverse product matrix and a strong brand presence, which enhances its long-term competitiveness in the market [3][18]. Summary by Sections Market Opportunity - The African hygiene products market is expected to grow significantly, with a projected CAGR of 10.7% for sanitary pads and 7.0% for baby diapers from 2026 to 2029. This growth is supported by demographic trends and increasing consumer awareness [2][17]. - The company is focusing on low-GDP regions in East and West Africa, avoiding direct competition with international brands in higher GDP areas, thus creating a differentiated advantage [3][18]. Competitive Advantages - The company has developed a comprehensive brand matrix covering both mid-to-high-end and mass-market segments, with over 380 SKUs. This broad pricing strategy allows it to cater to various income groups in emerging markets [3][18]. - Localized production in eight African countries helps the company save on tariffs and leverage low-cost labor, while a global procurement network enhances its bargaining power and cost control [4][18]. Channel Strategy - The company has built a mature sales network in Africa, reaching over 80% of the local population through wholesalers and distributors. It plans to replicate this successful model in Latin America and Central Asia [5][18]. - The company aims to deepen its market coverage in existing regions while expanding into new emerging markets, supported by strategic acquisitions to enhance brand influence [5][18]. Financial Performance - The company is projected to achieve net profits of 113.24 million USD in 2025, 133.33 million USD in 2026, and 156.69 million USD in 2027, reflecting growth rates of 19.1%, 17.7%, and 17.5% respectively [7][12]. - The expected EPS for the same years is 0.18 USD, 0.22 USD, and 0.25 USD, indicating a solid financial outlook [7][12]. Valuation - The report suggests a valuation based on a 25x PE for 2026, reflecting the company's leadership position in the African hygiene products market and its ongoing capacity and channel development [7][8].

Company and Industry Summary Company Overview - **Company Name**: 乐舒氏 (Leshu) - **Industry**: Hygiene Products in Africa - **Market Position**: Leading player in the African hygiene products market with a market share of 20.3% in baby diapers and 15.6% in sanitary napkins, significantly outperforming international brands by 20%-30% in cost-performance ratio [2][8][10]. Key Insights and Arguments Market Dynamics - **Cost Advantages**: Local manufacturing creates over 40% cost barriers through tax exemptions on raw materials versus 25% tariffs on finished products, and efficient logistics saving on transportation costs [2][11]. - **Sales Channels**: Deep penetration into local markets with a product turnover cycle of 1-2 months, compared to 1 year for international brands, facilitated by a digital CRM system for 100% online ordering by distributors [2][14]. - **Regional Growth**: Stable growth in East and West Africa (approximately 15% growth), with Central Africa expected to drive over 30% growth due to new capacity [2][18]. Financial Projections - **Revenue Growth**: Anticipated compound annual growth rate (CAGR) of about 20% over the next three years, with a significant recovery in 2025 due to currency stabilization [3][19]. - **Valuation**: Current stock price corresponds to a 16x PE ratio for 2026, with a reasonable valuation range of 20-25x [3][20]. Competitive Landscape - **Market Share**: Leshu holds a leading position in the African market with a CR5 of 64% in baby diapers and 40% in sanitary napkins, indicating a strong competitive edge over international brands [8][9]. - **Brand Recognition**: High brand awareness of nearly 90% in Africa, supported by a tiered brand matrix catering to different market segments [16][17]. Operational Insights - **Management Structure**: Fully owned by 森大集团 (Senda Group), with a management team experienced in African operations, comprising over 90% local hires [4][5]. - **Production Strategy**: Integrated production and sales model with local manufacturing capabilities established since 2009, focusing on market-first strategies [5][6]. Future Growth Opportunities - **New Product Categories**: Expansion into pull-ups and wet wipes, with expected growth rates exceeding 40% over the next three years [18]. - **Geographic Expansion**: Plans to enhance presence in Latin America and Central Asia, with expected revenue contribution from these regions to reach 15% by 2028 [2][18]. Additional Important Insights - **Challenges in New Market Entry**: High barriers to entry for new competitors due to established distribution networks and local manufacturing advantages [12][15]. - **Currency Risk Management**: Exposure to currency fluctuations managed through timely currency exchanges and price adjustments in local markets [21]. - **Long-term Growth Potential**: Significant growth potential in the African market, with a projected market size for sanitary products being 20 times that of China, driven by demographic trends and low penetration rates [24][25]. Conclusion Leshu is well-positioned in the African hygiene products market, leveraging local manufacturing, strong brand recognition, and a deep understanding of regional dynamics to sustain growth and competitive advantage. The company is expected to continue its upward trajectory with strategic expansions and product innovations.

Core Viewpoint - The company is positioned as a multinational health products firm focusing on rapidly developing emerging markets in Africa, Latin America, and Central Asia, specializing in the development, manufacturing, and sales of baby diapers, baby pull-ups, sanitary napkins, and wet wipes [1] Group 1: Market Position and Product Offerings - The company ranks first in Africa's baby diaper and sanitary napkin markets by volume, with market shares of 20.3% and 15.6% respectively for 2024 [1] - By revenue, the company holds the second position in Africa's baby diaper and sanitary napkin markets, with market shares of 17.2% and 11.9% respectively for 2024 [1] - The company focuses on creating differentiated products to meet diverse market demands, continuously iterating and upgrading its offerings [1] Group 2: Revenue Contribution and Growth - In the first four months of 2025, the revenue contributions from baby diapers, sanitary napkins, baby pull-ups, and wet wipes were $1.2 million, $0.3 million, $0.1 million, and $0.1 million respectively, accounting for 71.8%, 18.6%, 5.8%, and 3.9% of total revenue [2] - The compound annual growth rates (CAGR) for baby diapers, sanitary napkins, baby pull-ups, and wet wipes from 2022 to 2024 are projected at 16.8%, 34.1%, 8.6%, and 28.5% respectively [2] Group 3: Supply Chain and Production - The company has established a robust global supply chain with localized production to reduce costs, starting local production in Ghana in 2018 [3] - As of April 30, 2025, the company operates eight production facilities across eight African countries, with a total of 51 production lines for baby diapers, baby pull-ups, sanitary napkins, and wet wipes [3] - A new production facility in El Salvador is set to begin operations in August 2025, featuring a production line for baby diapers [3] Group 4: Distribution and Market Penetration - The company has built a wide distribution network, establishing 18 sales branches in 12 countries and a network of over 2,800 wholesalers, distributors, supermarkets, and other retailers [3] - The sales network covers over 80% of the local population in key operating countries, which is crucial for success in the baby and women's hygiene products industry in emerging markets [3] Group 5: Financial Forecast - Projected revenues for the company from 2025 to 2027 are $540 million, $640 million, and $740 million, representing year-on-year growth rates of 19%, 18%, and 16% respectively [4] - Expected net profits for the same period are $110 million, $140 million, and $170 million, with growth rates of 15%, 27%, and 18% respectively [4] - The company is rated as a premium leader in the hygiene products sector, with a favorable outlook for continued growth and expansion in products and markets [4]

Core Viewpoint - The Hang Seng Index Company announced the quarterly review results for the Hang Seng Index series, including the inclusion of LeShuShi (02698) in the Hang Seng Composite Index, effective March 9, 2026 [1] Company Overview - LeShuShi is a multinational hygiene products company focused on rapidly developing emerging markets in Africa, Latin America, and Central Asia, primarily engaged in the development, manufacturing, and sales of baby diapers, baby pull-ups, sanitary napkins, and wet wipes [1] - The company operates under several brands, including Softcare, Veesper, Maya, Cuettie, and Clincleer, with product sales covering over 30 countries in West Africa, East Africa, and Central Africa [1] - A significant portion of the company's revenue during the historical period came from sales to African customers [1] Market Implications - The inclusion of LeShuShi in the Hang Seng Composite Index may lead to its potential addition to the Hong Kong Stock Connect, as it meets various criteria such as market capitalization, liquidity, and listing duration [1]

Group 1 - The Hang Seng Index Company announced the quarterly review results for the Hang Seng Index series as of December 31, 2025, with LeShuShi (02698) being included in the Hang Seng Composite Index [1] - The changes will take effect after the market closes on March 6, 2026, and will be effective from March 9, 2026, with corresponding adjustments to the eligible stocks for the Hong Kong Stock Connect [1] - According to a report by CICC, LeShuShi is likely to be included in the Hong Kong Stock Connect due to meeting various criteria, including market capitalization, liquidity, and listing time [1] Group 2 - LeShuShi is a multinational hygiene products company focused on rapidly developing emerging markets in Africa, Latin America, and Central Asia, primarily engaged in the development, manufacturing, and sales of baby diapers, baby pull-ups, sanitary napkins, and wet wipes [1] - The company operates under brands such as Softcare, Veesper, Maya, Cuettie, and Clincleer, with product sales covering over 30 countries in West Africa, East Africa, and Central Africa [1] - During the historical performance period, the majority of the company's revenue was derived from sales to African customers [1]