Haitong International released a research report forecasting that SOFTCARE's (02698) revenue for 2025-27 will reach $550 million, $650 million, and $760 million, respectively, representing year-on-year growth of 21%, 17%, and 17%. Adjusted net profit is projected to be $110 million, $130 million, and $150 million for the same periods, with year-on-year increases of 14%, 17%, and 17%. Benchmarking against comparable companies and considering SOFTCARE's dominant position in the African hygiene products market, coupled with its benefit from Africa's demographic dividend and the structural opportunity of rising product penetration, the report assigns a 2026 P/E ratio of 25x. This corresponds to a reasonable market capitalization of HK$25.1 billion and a target price of HK$40.5 (based on an exchange rate of USD/HKD=7.8). The firm initiated coverage with an "Outperform" rating.
SOFTCARE: A Leader in Africa's Hygiene Products Industry SOFTCARE is a multinational hygiene products company focused on emerging markets such as Africa, Latin America, and Central Asia. It is primarily engaged in the development, manufacturing, and sales of baby and feminine hygiene products, including baby diapers, training pants, sanitary napkins, and wipes. According to Frost & Sullivan data, based on 2024 sales volume, the company ranked first in both the African baby diaper and sanitary napkin markets, with market shares of 20.3% and 15.6%, respectively. Based on 2024 revenue, it held the second position in both the African baby diaper and sanitary napkin markets, with shares of 17.2% and 11.9%.
Demographic Dividend and Low Penetration Drive High Growth, Leading the African Market in Two Categories Africa's population growth and accelerating urbanization, combined with the low penetration rates of baby and feminine hygiene products on the continent, form the core drivers of high industry growth, indicating significant market potential. SOFTCARE, with its product matrix covering mid-to-high-end, mid-range, and mass markets, demonstrates leading growth momentum in both the African baby diaper and sanitary napkin markets.
Core Competitive Advantages (1) Differentiated brand strategy, building a powerful brand portfolio. After launching its core brand, Softcare baby diapers, in Ghana in 2009, the company gradually expanded to include the Maya, Veesper, Cuettie, and Clincleer brands, constructing a comprehensive brand matrix covering four core product categories. As of the end of April 2025, the four core categories comprised over 340 SKUs. (2) Deep cultivation of localized production combined with refined end-to-end control, building a core competitive barrier in the supply chain. The company commenced localized production in Ghana in 2018 and, by the end of April 2025, had established 8 factories with 51 production lines across 8 African countries, making it the hygiene products enterprise with the most local factories in Africa. The "local production, local sales" model significantly shortens the sales chain, reduces costs, and enhances consumer reach efficiency and emotional connection. (3) Deeply penetrated multi-channel sales network with extensive reach to end-consumer scenarios. By the end of April 2025, the company's sales network had expanded to over 30 countries across Africa, Latin America, and Central Asia, with 18 sales branches established in 12 countries, serving more than 2,800 clients. The sales network covers all administrative regions in its core operating countries, reaching over 80% of the local population.
Future Growth Strategy: Regional Expansion + Category Extension + Asset Injection (1) Regional Expansion: Replicating the "Africa Model" to create a second global growth curve. Leveraging its strong foundation in the African market, SOFTCARE plans to extend its proven "Africa Model" to other emerging markets with similar demographic and consumption attributes, such as Latin America, to build a sustainable second growth curve. (2) Category Expansion: Channel reuse and M&A-driven expansion of the brand portfolio. The report suggests that category expansion and mergers & acquisitions are strategic necessities for SOFTCARE's evolution from a "leading hygiene products enterprise" to a "leading fast-moving consumer goods (FMCG) group." For organic category expansion, the company will leverage its mature channel network and precise consumer insights to prioritize expanding into health care and hygiene-related product areas, replicating the successful operational model of its existing core products. Regarding external M&A, referencing the development history of international FMCG brands, the report believes the company will also utilize strategic acquisitions as an important means to rapidly gain brand assets and market access.
Risk Warnings: Risks associated with economic and political changes in overseas operating regions, foreign exchange fluctuation risk, slower-than-expected capacity expansion, raw material price volatility risk, and product quality and safety risks.
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