Hengan: Price Competition Clouds Top-Line Growth; Reduce Fair Value Estimate by 9%

We review our 2024-25 forecasts for no-moat Hengan and lower our net profit projections by 14%-16% due to expectations for continued price competition in the tissue and sanitary napkin markets. Despite positive volume growth for tissues, Hengan had to increase promotions and lower ex-factory prices. We expect this situation to persist into at least first-half 2025 as consumers continue to look for bargains and small brands, selling via e-commerce channels, offer competitive pricing.