According to a research report, Morgan Stanley stated that the tissue paper business of Hengan International (01044) should remain the primary growth driver, benefiting from volume growth and market share gains. However, revenue growth is likely to stay moderate due to pressure on average selling prices from online and new retail channels. The firm has consequently lowered the company's target price by 4.2% from HK$24 to HK$23, reflecting reduced government subsidies and tax rebates.

Morgan Stanley views the stock's valuation as not expensive. With stable cash generation capabilities, the dividend yield should provide support for the share price. Nevertheless, it would be difficult to justify a higher valuation multiple unless revenue growth accelerates noticeably or clearer evidence emerges of a sustained recovery in the hygiene products segment. The investment rating of "Market-Perform" is maintained.