Citigroup anticipates HENGAN INT'L (01044) will report a 1% revenue decline for the first half of 2024, accompanied by a high single-digit drop in net profit. The bank maintains its "Neutral" rating while increasing the target price from HK$22.1 to HK$22.3, projecting potential stabilization in full-year sales and earnings due to anticipated second-half improvements against a low base.

Second-quarter performance is expected to remain sequentially weak despite some recovery in tissue paper sales and margins. The sanitary napkin segment continues facing significant margin compression from intensified competition, with Citigroup noting this pressure shows no signs of abating.

In the tissue business, first-half sales are forecast to rise 4% year-over-year, driven by volume growth amid flat average selling prices. Margin expansion to 22% is anticipated for the period (up from 19.6% in H1 2023), attributed to falling pulp costs, stabilized promotional pricing, and improved product mix.

Conversely, sanitary napkin sales are projected to plummet 15% during the first half, with gross margins contracting to approximately 61%.