Citibank cuts Hang Seng's target price to HK$21.1, difficult sales and profit prospects in the second half of the year

On November 26th, Jin10 Data reported that Citigroup released a report stating that it recently met with the management of Hengan International Group Company Limited (01044.HK) and believed that due to intense price competition, operational deleveraging, and reduced government subsidies, the company’s sales and profit margins in the second half of the year will be more severe than the first half. However, the management maintains the fixed annual dividend at RMB 1.4 per share, which means a dividend yield of 6.9%, an attractive level. Citigroup lowered its net profit forecast for Hengan from 2024 to 2026 by 15% to 17%, reflecting weaker sales and profit prospects in the industry downturn and intense price competition. The target price was lowered from HKD 25 to HKD 21.1, equivalent to a forecast P/E ratio of 9 times next year, and the stock was maintained as a neutral rating.