UBS issued a research report initiating coverage on SOFTCARE (02698) with a "Buy" rating and a target price of HK$41. The company is uniquely positioned to capture long-term structural growth in Africa's hygiene products consumption, benefiting from favorable demographics, low category penetration, and decades-long economic and consumer growth runway. As a regional leader, SOFTCARE maintains a durable moat through scale, localized manufacturing, distribution, and execution capabilities.

The bank believes SOFTCARE can sustain a 15% compound annual growth rate (CAGR) in sales from 2026 to 2028 while maintaining resilient margin structures. With potential tailwinds from forex dynamics and additional optionality from Latin American expansion, UBS views the stock's 18x P/E ratio—aligned with a 15% EPS CAGR (2026-2028)—as an attractive risk-reward proposition with long-term earnings growth potential.

UBS also forecasts stable margin structures for SOFTCARE from 2026 to 2028, supported by cost efficiencies driven by localized manufacturing and economies of scale. Potential forex tailwinds could further bolster average selling prices (ASP). Additionally, stable raw material price outlooks may reduce input cost volatility.

Looking ahead, the bank sees upside margin potential from Latin American penetration, where retail ASPs exceed those in Africa. Geographic diversification could drive structurally higher profitability over time.