First Read: Essity Off-the-call (Q2 26)

研报英文原文证据摘录

First Read: Essity Off-the-call (Q2 26)

Forecast returns

Forecast price appreciation 0.4%

Forecast dividend yield 3.4%

Forecast stock return 3.8%

Market return assumption 7.4%

Forecast excess return -3.5%

Company Description

Essity is a leading global hygiene and health company that develops, produces, markets and

sells personal care and tissue products in 150 countries. It was spun out of Swedish company

SCA Group in June 2017. It has four divisions: consumer tissue (31% of 2025 sales, 25% of

2025 adjusted EBITA), professional hygiene (26% of sales, 30% of profit), personal care (23%

of sales, 21% of profit) and health & medical (20% of sales, 24% of profit). Personal care

comprises feminine care (9% of group sales), incontinence products retail (8%) and baby care

(5%). Major brands include TENA, Tork, Libero and Leukoplast.

Valuation Method and Risk Statement

The broader household products and personal care sector is a competitive industry with a

number of big, international companies competing for market shares worldwide. Investment

in product innovation and marketing represents a substantial part of its costs, and can vary

from quarter to quarter. The sector is also exposed to competition from private-label product

manufacturers and industry consolidation among its major clients, the mass-market retailers.

All these considerations can impact net revenue growth and profitability. Raw material price

volatility and foreign exchange changes can affect sales and profit growth momentum. We

set our price targets using a combination of: (1) our views on where the stocks should trade

relative to each other and to the European staples sector. We consider execution, organic

sales growth, profitability, EPS growth, ROIC and portfolio transformation optionality in