UBS has issued a research report raising HENGAN INT'L's (01044) earnings forecasts for 2025 to 2027 by 1% to 4%, and revenue forecasts by 1% to 2%. The target price has been increased from HK$27.7 to HK$29.5, while maintaining a "Buy" rating.

The report noted that HENGAN INT'L's revenue and net profit for the first half of 2025 declined by 0.2% and 2.6% respectively. Excluding foreign exchange gains, net profit is expected to have dropped approximately 12% during the period, which was broadly in line with expectations.

During the period, the tissue business recorded revenue growth of 3% year-over-year, while the sanitary napkin business saw revenue decline by 14% year-over-year. Management indicated that wet wipes performance remained solid and competition in the tissue market was better than expected. However, sales of sanitary napkins and mid-to-low-end diaper products declined due to intensified competition.

Looking ahead, the group expects tissue sales to achieve steady growth, and the gross margin for sanitary products is anticipated to improve in the second half of 2025.