GTHT Securities initiated coverage on SOFTCARE (02698) with a "Buy" rating, highlighting the company's rapid growth in overseas markets and its leading position in Africa's hygiene products sector. The firm expects SOFTCARE to benefit from industry tailwinds, capacity expansion, and strong demand in emerging markets. Key points from the report include:

1. **Market Leadership in Africa**: SOFTCARE, officially listed on the Hong Kong Stock Exchange, is a dominant player in Africa's hygiene products market, specializing in baby diapers, sanitary pads, training pants, and wipes. In 2024, baby diapers and sanitary pads accounted for 75% and 17% of revenue, respectively. The company, originally a division of SD Group since 2009, has established a strong brand presence and local production footprint in Africa, listing on November 10, 2025.

2. **High Growth in Emerging Markets**: Africa's hygiene products market is projected to grow at a 7.9% CAGR from 2024 to 2029, the highest globally. The baby diaper and sanitary pad markets are highly concentrated, with CR5 at 61.0% and 41.3% by sales value, respectively. SOFTCARE ranks second by sales value (17.2% for diapers, 11.9% for pads) but leads in volume share (20.3% for diapers, 15.6% for pads).

3. **Competitive Strengths**: - **Brand Portfolio**: SOFTCARE's brands (Softcare, Maya, Cuettie for diapers; Softcare, Veesper, Clincleer for pads) cover all price segments, with 89.0% brand awareness and 95.7% repurchase rates in diapers, and 95.4% awareness and 92.0% repurchase rates in pads. - **Distribution**: With over 15 years in Africa, the company's sales network spans 30+ countries, reaching over 80% of local populations. - **Production**: It ranks first in Africa for both diaper and pad production (2024), achieving 100% localized supply.

4. **Outlook**: - **Revenue**: Emerging market demand and market share gains are expected to drive growth, supported by capacity expansion using IPO proceeds. - **Profitability**: Gross margins improved YoY in 2023–2024, with further gains anticipated from brand upgrades and product mix optimization, offsetting potential raw material cost volatility.

**Risks**: Intensifying competition and currency fluctuations.