Citigroup has adjusted its profit forecasts for HENGAN INT'L (01044) for 2026 and 2027 by approximately 1%. The bank raised its target price for the stock from HK$27 to HK$28.2 based on a sum-of-the-parts valuation, while maintaining a "Neutral" rating. HENGAN INT'L's net profit for the second half of 2025 rebounded by 31% year-on-year, driven by a recovery in gross profit margin from a low base, which aligned with the bank's expectations. Revenue for the latter half of 2025 grew by 4%, meeting projections, as improved sales of tissue and hygiene products offset declines in other business segments. Gross margin performance across all business lines in the second half of 2025 exceeded expectations; however, this was offset by lower government subsidies and higher advertising and promotion expenses, resulting in operating profit and net profit meeting forecasts. Despite HENGAN INT'L's solid performance in the second half of 2025, management aims to maintain stable sales and profit margins in 2026, citing intense competition and potential pressure from raw material costs. The company plans to address these challenges by enhancing its product mix and improving operational efficiency.