Kaiyuan Securities has released a research report stating that SOFTCARE (02698) is positioned for long-term stable growth in a global market with high potential. The firm forecasts net profits attributable to the parent company of $112 million, $132 million, and $154 million for 2025 to 2027, respectively, with corresponding EPS of $0.18, $0.21, and $0.25. The current share price implies a P/E ratio of 22.3x, 18.8x, and 16.1x for those years. This initial coverage comes with a "Buy" rating. Key points from Kaiyuan Securities are as follows:
SOFTCARE is a leading enterprise in Africa's hygiene products sector, specializing in the R&D, production, and sales of baby diapers and sanitary napkins, holding the top market share by sales volume for both categories on the continent. The African market benefits from a demographic dividend, coupled with low penetration rates for diapers and sanitary napkins, indicating substantial room for industry growth. The company boasts a diverse brand portfolio on the product side and leverages localized production facilities across eight African countries to build cost advantages, complemented by an extensive distribution network that reaches a broad consumer base. The report suggests that the market underestimates SOFTCARE's robust localization capabilities and expresses optimism about the company's potential for further channel and category expansion in Africa's demographically favorable market, with the ability to replicate its localized operational model in other emerging regions globally.
Product-wise, SOFTCARE employs a multi-brand, tiered strategy for precise market positioning. In baby care, its diaper offerings include four main brands, such as Softcare and Maya, along with multiple differentiated product lines, reaching 263 SKUs by April 2025. In the feminine care segment, the company has established a three-brand matrix—Softcare, Veesper, and Clincleer—comprising 44 SKUs to address diverse menstrual needs. By developing tailored products for local African demands, SOFTCARE maintains its leadership in sales market share for baby diapers and sanitary napkins in Africa, with growth rates outpacing competitors.
Regarding production and channel capabilities, localized manufacturing reduces costs and enhances efficiency. SOFTCARE operates eight factories with 51 production lines across eight African nations, with Ghana and Kenya serving as key hubs, making it the hygiene products company with the broadest local factory footprint in Africa. In 2024, it led African production volumes for both baby diapers and sanitary napkins, with utilization rates for core categories recovering, and plans for capacity expansion to strengthen supply capabilities. On the distribution front, the company's extensive and deep network ensures broad market reach. With over 15 years of experience in emerging markets, SOFTCARE has built a sales network covering more than 30 countries, supported by 18 branches and over 2,800 wholesalers and distributors, reaching over 80% of the local population. Compared to international brands that struggle with channel penetration, SOFTCARE's deep understanding of African offline channels provides a competitive edge, characterized by strong channel loyalty and first-mover advantages.
Risks include intensified market competition, foreign exchange volatility, and potential delays in capacity expansion.