Haitong International: First Comfort (02698) “Better Than the Market” Rating Target Price HK$40.5

The Zhitong Finance App learned that Haitong International released a research report saying that in 2025-27, the revenue of Le Comfort (02698) is expected to be US$5.5/6.5/760 million, up 21%/17%, respectively; adjusted net profit is US$1.1/1.3/150 million, respectively, up 14%/17%/17% year on year. Referring to comparable companies, considering Le Comfort's absolute leading position in the African hygiene market and the structural opportunity to benefit from the African demographic dividend and increased hygiene penetration rate, it was given 25xPE in 2026, corresponding to a reasonable market value of HK$25.1 billion, and a target price of HK$40.5 (corresponding exchange rate is USD/HKD = 7.8), which was covered for the first time and gave a “superior to the market” rating.

Haitong International's main views are as follows:

Le Comfort: a leading company in the hygiene products industry in Africa

Le Comfort is a multinational hygiene products company focusing on emerging markets such as Africa, Latin America, and Central Asia. It is mainly engaged in the development, manufacture and sale of baby and female hygiene products such as baby diapers, baby pull-ups, sanitary napkins, and wet wipes. According to Frost & Sullivan data, based on 2024 sales, the company ranked first in the African baby diaper and sanitary napkin market, with market shares of 20.3% and 15.6% respectively; in terms of 2024 revenue, the company ranked second in the African baby diaper market and sanitary napkin market, with market shares of 17.2% and 11.9% respectively.

Demographic dividends and low penetration rates drive high growth, leading the African market in both categories

Africa's population growth and urbanization process are compounded by the low penetration rate of infant and female hygiene products in Africa, forming the core driver of high growth in the industry, and there is plenty of room for market improvement. With a product matrix covering the mid-range, high-end, mid-range and mass markets, Le Comfort has shown leading growth in the African baby diaper and sanitary napkin market.

Core competitiveness

(1) Differentiate brand strategies to create a strong brand matrix. After launching the core brand Softcare baby diapers in Ghana in 2009, the company gradually expanded to Maya, Veesper, Cuettie and Clincleer brands, building a comprehensive brand matrix covering the four core categories. By the end of April 2025, there were more than 340 SKUs in the four core categories.

(2) Localized production capacity is deeply cultivated and superimposed fine control of the entire chain to build a core competitive barrier in the supply chain. The company started localized production in Ghana in 2018. By the end of April 2025, it had set up 8 factories and 51 production lines in 8 African countries, making it the hygiene products company with the largest number of local factories in Africa. The “local production, local sales” model greatly shortens sales links, reduces costs, and enhances consumer reach efficiency and emotional connection.

(3) Deeply sinking multi-channel sales network, widely reached terminal consumption scenarios. By the end of April 2025, the company's sales network had expanded to more than 30 countries in Africa, Latin America and Central Asia, and established 18 sales branches in 12 countries to serve more than 2,800 customers. The company's sales network has covered all administrative regions of the core operating countries, reaching more than 80% of the local population.

Future growth strategy: regional expansion+category expansion+asset injection

(1) Regional expansion: replicate the “African model” and create the second growth curve of globalization. Relying on the deep roots of the African market, Le Comfort extended the “African model” that had already been implemented to Latin America and other emerging markets with similar population and consumption characteristics, creating a sustainable second growth curve.

(2) Category expansion: channel reuse+merger and acquisition drive, expand the brand matrix layout. The bank believes that category expansion and mergers and acquisitions have become inevitable in Le Comfort's strategy to move from a “leading hygiene products company” to a “leading FMCG group.” In terms of endogenous category expansion, the company will rely on mature channel networks and accurate consumer insight to prioritize the expansion of products in health care and health-related fields, and replicate the successful operation model of existing core products. In terms of epitaxial mergers and acquisitions, referring to the development history of international FMCG brands, the bank believes that in the future, the company will also use strategic acquisitions as an important means of quickly gaining brand assets and market entry.

Risk warning: risk of economic and political changes in overseas business regions, risk of exchange rate fluctuations, production capacity expansion falling short of expectations, risk of fluctuations in raw material prices, and risk of product quality and safety.