FAST NEWS: Hengan’s profit jumps on lower pulp prices

The Latest: Paper products maker Hengan International Group Co. Ltd. (1044.HK) on Thursday reported its revenue rose 5.1% to 23.8 billion yuan ($3.29 billion) last year, while its profit rose nearly 46% to 2.8 billion yuan.

Looking Up: The company lowered production costs last year after clearing out  inventory and capitalizing on wood pulp prices that began to ease in the second quarter.

Take Note: Hengan recorded a foreign exchange loss of about 150 million yuan for the year, marking a significant improvement from a 900 million yuan foreign exchange loss in 2022.

Digging Deeper: Hengan was founded in 1985 as a maker of paper products like sanitary napkins and tissue paper and has been publicly traded since 1998. The biggest factor affecting its costs is wood pulp prices, which are currently at a mid- to high level, without any clear indication of where they are heading, said CEO Hui Ching Lau. The company doesn’t anticipate any major changes in pulp prices in the short term and expects its revenue will remain stable this year.

Market Reaction: Hengan’s stock opened lower on Friday and closed down 4.8% at HK$24.75 by the midday break. The stock now trades at the middle to lower end of its 52-week range.

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