A More Subdued Growth Outlook for Hengan; Lowering FVE to HKD 39.50 per Share

Hengan operates in the tissue, sanitary napkin and diaper markets in China, particularly as one of the leading brands in tissue and sanitary napkins. Being one of the early movers in personal-care products, it has developed an extensive offline distribution network in China. It has also penetrated lower-tier cities, which contributed close to 80% of its sales in 2021. With its focus in lower-tier cities, the majority of the company’s products sit in the mass market, below premium segments.