Report published September 2, 2026
Goldman Sachs: Hengan (1044.HK) Faces Near-Term Margin Pressure from Pulp Costs & Intense Competition
Source and citation context
- Issuer
- Goldman Sachs
- Report date
- September 2, 2026
- Analysis as of
- Not stated in source
Authors / editors: Leaf Liu, Christina Liu, Valerie Zhou
Finvaulta summarizes Goldman Sachs's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
Hengan management expects challenging 2H26 conditions with FY26 profits declining double digits due to rising pulp costs and persistent domestic price competition across tissue and sanitary napkins. Potential stabilization and low-single-digit revenue growth are anticipated in 2027 as raw material costs moderate.
Key Takeaways
- 1.Management anticipates a challenging 2H26 with double-digit year-over-year profit decline for FY26 driven by tissue and sanitary-napkin sales pressure and rising pulp costs.
- 2.Overall gross profit margin may decline 1-2ppt year-over-year in 2H26 as higher pulp prices kick in during 3Q due to a 3-month inventory lag.
- 3.For 2027, management sees potential for low-single-digit revenue recovery and margin stabilization as pulp prices ease to around US$500-550/t off a low earnings base.
Table of Contents
- Bottom line
- Key takeaway
- Disclosure Appendix
Report data
Key figures extracted from this report
| Metric | Estimate | Context |
|---|---|---|
| Selling expenses as percentage of sales | 24% | Selling expenses were c.24% of sales in 1H and expected to be broadly stable HoH in 2H26. |
| Overall Gross Profit Margin change | -1 to -2 ppt | Overall gross profit margin expected to decline yoy due to higher pulp costs entering inventory. |
| Pulp price expectation | 550 USD/t | Management expects pulp prices to hover around this level in 2H26 before easing to US$500-550/t in 2027. |
| Net Cash | 6 Rmb bn | Company cash position supporting stable dividends. |
| Liquid sanitary napkins sales | 60 Rmb mn | On track for Rmb100mn+ FY26 target, representing ~20% of category sales. |
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Authors / Editors
Reported Data Context
- Selling expenses as percentage of sales: 24 % (1H26) · Source: Company data
- Overall Gross Profit Margin change: -1 to -2 ppt (2H26) · Source: Company guidance
- Pulp price expectation: 550 USD/t (2H26) · Source: Company guidance
- Net Cash: 6 Rmb bn (1H26) · Source: Company data
- Liquid sanitary napkins sales: 60 Rmb mn (1H26) · Source: Company data
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