Hengan International Group (1044) H2 2023 earnings summary

Executive summary

• Revenue rose 5.1% YoY to RMB23.8bn; core-business revenue increased 8.0% to RMB21.2bn.

• Profit attributable to shareholders grew 45.5% to RMB2.8bn, while operating profit increased 38.6% to RMB4.0bn.

• Tissue paper led core-business growth; cash position strengthened and gearing declined amid a competitive market.

Financial highlights

• Gross profit rose 4.2% to RMB8.0bn; overall gross margin was 33.7% versus 34.0% in 2022.

• Basic and diluted EPS each increased 45.8% to RMB2.415.

• 2023 dividend was RMB1.40 per share, unchanged YoY; interim and final dividends were RMB0.70 each.

Outlook and guidance

• 2024 tissue revenue is expected to maintain rapid growth, with tissue gross margin expected to continue improving.

• Sanitary napkin revenue is expected to grow steadily in 2024, with margin improvement supported by premiumization; diaper sales are expected to grow and margins remain stable.

• Pulp prices are expected to remain stable below the 2023 average cost level, supporting 2024 operations.

• New production capacity at sites in Fujian, Hunan and Guangdong is expected to come on stream successively in 2024.