Leshi (02698.HK) Initiation: Africa's Hygiene Product Leader, Growth Certainty Meets Valuation Discount

Rating: Cautiously Bullish | Target Price: HKD 35–40 | Current Price: HKD 29.28 (Close 2026-07-21) | Margin of Safety: ~+21% (based on base case fair value floor) | Time Horizon: 12–18 months

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I. Key Conclusions Summary

Leshi is the #1 brand by sales volume in Africa's baby diaper and sanitary napkin markets. Leveraging a rare moat of "localized production + deep distribution," it continues to capture share in Africa's hygiene product market, where penetration rates are only 20%–30%. FY2025 revenue was US$567 million (+24.9%), adjusted net profit was US$122 million (+24.4%), and 2026 first half pre-announcement indicated adjusted net profit growth exceeding 47%. However, there are blemishes—OCF/Net profit <1, ROE plummeted from 68% to 19% due to IPO proceeds, the Latin American market remains small (only 3.9% of revenue), and the PEG ratio after adjustment is approximately 1.14x, not the apparent 0.68x. At the current price of HKD 29.28, the FY2026E P/E is approximately 16.6x. For an emerging market consumer company growing 15%–20% with a clear moat, this valuation is reasonably low. The target price is HKD 35–40, corresponding to FY2027E P/E of 17–19x.

Core Thesis: Africa penetration dividend × localized production moat × Latin America supplementary growth. Key Constraints: Emerging market FX risk, accelerating competitor localization, controlling shareholder lock-up expiry in November 2026.

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II. Investment Arguments

C1 — Africa's hygiene product market is in the early stages of rapid penetration growth, with demographic structure providing a long-term volume base. Leshi, as the #1 sales brand, will continue to benefit (Confidence 0.75)

Key Evidence:

• Frost & Sullivan (company's IPO industry advisor, paid custom report) data: 2024 Africa baby diaper/pull-up/sanitary napkin market size approx. US$3.8 billion, 2024–2029E CAGR 7.9%, projected to reach US$5.6 billion by 2029; Africa baby diaper penetration rate approx. 20% in 2024, sanitary napkins approx. 30%, far below mature market levels of 70%–90%
• Leshi FY2025 Annual Report / Prospectus: Africa baby diaper sales volume share 20.3% (1st), sanitary napkins 15.6% (1st); FY2025 baby care sales volume 5.14 billion units (+17.9%), of which Africa market sales volume +16.3%
• Industry Background: Africa's population under 20 exceeds 50%, annual births approx. 42–44 million (UNFPA), urbanization rate approx. 43% and rising

Note: Frost & Sullivan is a paid advisor report; its penetration and growth rate data may be optimistic. Hygiene product consumption in Africa is constrained by GDP per capita (Sub-Saharan Africa approx. US$1,600). Low-income households' actual diaper usage is only 1/8 of the recommended amount (Huachuang Securities). Purchasing power is a key variable for penetration realization. The actual industry CAGR for 2020–2024 was approx. 6.8% (Dongwu Securities), lower than the forecast 7.9%, indicating some slowdown.

C2 — Localized production and deep distribution constitute a rare moat, unlikely to be replicated by competitors within 1–2 years (Confidence 0.65)

Key Evidence:

• FY2025 Annual Report: As of end of 2025, 9 factories in 8 African countries, 66 production lines in operation (net addition of 1 factory and 18 lines vs FY2024); distribution network covers 2,132 wholesalers + 418 distributors
• Prospectus / Industry Reports: Africa's hygiene product import dependency exceeds 80%. Localized production can avoid 15%–25% finished product import tariffs and inland logistics costs
• Brand awareness 89%–95%, repurchase rate 92%–96% (from internal management survey cited in prospectus, not third-party audited)

Competitor Dynamics: P&G expanding Pampers lines in South Africa; Kimberly-Clark investing US$100 million in a Nigeria plant (2024); Turkey's Hayat Kimya launching eco-friendly products in Nigeria—multinationals accelerating localization will gradually narrow the cost gap with Leshi. The "1–2 years hard to replicate" judgment is reasonable, but over a 3–5 year medium-term horizon, competitors could potentially leapfrog through building or acquiring channel partners.

C3 — Latin America and Central Asia markets constitute a meaningful supplementary growth point, but are still small and unlikely to become major profit drivers in the short term (Confidence 0.55)

Key Evidence:

• FY2025 Annual Report: Latin America revenue US$22 million (+134%), 3.9% of total revenue; Peru market sales US$17.3 million (+85.8%)
• Peru factory fully operational in April 2026 (Changjiang Securities); El Salvador factory started production in August 2025
• Latin America baby diaper market approx. US$7.3 billion (Grand View Research), roughly 2x Africa's size but lower growth (CAGR 5%–6%)

Need for Caution: FY2025 Latin America revenue base is only US$22 million. Absolute incremental contribution is limited (from US$9.4 million in FY2024 to US$22 million = increase of US$12.6 million, contributing only 2.2pp to the company's total US$567 million revenue). It takes time for Peru/El Salvador factories to ramp up capacity utilization to 70%–80%, and P&G/Kimberly-Clark have been entrenched in Latin America for decades. The Central Asia market (Kazakhstan) is not separately broken out in the financial report, and its size is minimal. Should not be described as a "second growth curve"; a more appropriate positioning is "supplementary growth point."

C4 — Profitability is genuine but not "robust"—OCF conversion is weak, ROE dropped sharply due to IPO proceeds, net cash primarily comes from shareholder injections rather than operational accumulation (Confidence 0.60)

Key Evidence:

• FY2025 adjusted net margin 21.6%, flat vs FY2024; FY2023–2025 were 20.4% / 21.6% / 21.6%
• FY2025 operating cash flow US$115 million, OCF/Net profit = 0.95 (FY2024 was 1.15)—ratio below 1.0 indicates marginal weakening of profit-to-cash conversion, mainly due to accounts receivable increasing from US$5.4 million to US$9.7 million (+81%, 3x revenue growth rate) and inventory increases
• FY2025 end cash US$445 million, vs FY2024 end only US$31.1 million—the vast majority of net cash of US$424 million came from IPO proceeds (approx. US$350 million), not operational accumulation
• ROE dropped from 68% in FY2024 to 19% in FY2025 (equity base inflated from US$140 million to US$637 million post-IPO)
• First final dividend of US$0.0888 per share (total payout approx. US$55 million, payout ratio 45%), but controlling shareholder couple holds approx. 54.6%, meaning approx. US$30 million flowed to the controlling shareholder

On the positive side: Adjusted net margin of 21.6% is relatively strong among consumer goods companies; net cash of US$424 million provides ample ammunition for capacity expansion and new market development; no goodwill, no asset pledges, no material contingent liabilities.

C5 — Valuation is in a reasonably low range, but not extremely cheap—PEG adjusted to approx. 1.14x, needs to incorporate emerging market and liquidity discounts (Confidence 0.55)

Key Evidence:

• Current price HKD 29.28, market cap approx. HKD 18.18 billion (US$2.32 billion), FY2026E P/E approx. 16.6x (based on sell-side consensus net profit of approx. US$140 million)
• PEG = 16.6 / 14.5 (FY2026E net profit growth) = 1.14x—Note: the previously circulated 0.68x mistakenly used FY2025 actual growth (24.4%) instead of FY2026E expected growth
• Peer comparison: P&G P/E 21x (near-zero growth), Kimberly-Clark P/E 18x (growth ~2%), Hengan International P/E 10x (growth ~2%). Leshi's growth is significantly higher than these mature market benchmarks; a 16.6x P/E is reasonable but not "significantly low"
• EPV zero-growth floor approx. HKD 19.40/share (WACC 11%), growth options constitute approx. 33.8% of current price—for a company growing 15%–20%, the growth pricing is not aggressive
• Sell-side consensus target price midpoints approx. HKD 35–37 (8 covering analysts, all Buy/Accumulate), implying 20%–26% upside from current price

Two major discount factors must be emphasized: ① Liquidity discount—average daily turnover approx. HKD 88 million, free float only approx. 33%, should not be directly benchmarked to global blue chips like P&G/Kimberly-Clark; ② Emerging market risk premium—over 96% of revenue comes from Africa and Latin America, facing systemic risks such as currency depreciation, foreign exchange controls, and political instability. The controlling shareholder's approx. 332 million shares lock-up expiry in November 2026 (53.4% of total shares) is a key valuation overhang.

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III. Core Financial Data

*Data marked from annual report disclosure, not independently verified.

Reasons for metric changes: FY2025 revenue growth of 24.9% was attributed by the company to synergistic growth in sales volume and average selling price (Africa volume +16.3%, Latin America volume doubled; ASP up 4%–7% across categories, benefiting from strengthening of most operating currencies against the USD). Administrative expenses +38.7% to US$39.13 million, primarily due to post-listing professional service fees (consulting/legal/audit), travel expenses, and share-based compensation. FY2025 net foreign exchange gain of US$5.4 million (FY2024 loss of US$0.12 million), mainly due to appreciation of multiple currencies (Europe, Africa, Latin America) against the USD.

IV. Latest Performance Commentary (2026 First Half Pre-announcement)

On July 21, 2026, the company issued a positive profit alert: expects 2026H1 revenue ≥ US$328 million (+28%), profit ≥ US$73 million (+40%), adjusted net profit ≥ US$75 million (+47%). Growth drivers include: ① Volume and price synergy in core East and West Africa markets, coupled with Latin America expansion; ② ASP improvement driven by strengthening of operating currencies against the USD; ③ Increased interest income from IPO proceeds; ④ Absence of listing expenses (FY2025H1 contained approx. US$2 million in listing expenses).

Comparison with sell-side expectations: FY2026 full-year sell-side consensus net profit is approx. US$137–149 million. Based on minimum H1 pre-announcement of US$73 million, H1 achieves approx. 49%–53% of full-year estimate. Considering that the second half is typically the peak season (approx. 70% of FY2024 profit realized in H2), there is upside potential for the full year. However, note: CICC cautioned that the impact of rising raw material costs may gradually materialize in 2026H2, and H1 growth rates may not linearly extrapolate to the full year.

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V. Business Model and Earnings Quality

Business Model: Leshi operates an "asset-light manufacturing + brand distribution" model, centered on localized production (self-built factories in 8 African countries) + global supply chain (centralized procurement via Sunmart in Dubai) + deep distribution (wholesaler/distributor network reaching rural levels). Revenue is from one-time consumer goods sales (non-subscription/non-recurring), with strong necessity demand but limited pricing power—ASP improvement primarily benefits from FX rather than brand premium.

Cash Content of Earnings:

• OCF/Net profit: FY2024 1.15 (excellent), FY2025 dropped to 0.95 (marginal weakening). FY2025 OCF growth (+5.4%) significantly lagged net profit growth (+27.4%), mainly due to accounts receivable +81% (relaxed credit terms for supermarket channel expansion), inventory +19.7%, prepayments and other receivables +72.5%
• FCF/Net profit: FY2024 0.81, FY2025 dropped to 0.52 (CapEx increased from US$32.87 million to US$52.37 million)
• Recurring earnings test: FY2025 adjusted net profit US$122 million vs net profit attr. to parent US$121 million, difference only 0.9%, one-off items had limited impact. However, FY2023 net profit attr. to parent US$64.68 million vs adjusted US$83.72 million (difference 29%), need to scrutinize early-period adjustment scope
• Non-GAAP rigor: Company's adjusted net profit excludes listing expenses, FX gains/losses, share-based compensation—SBC of US$1.218 million is added back, which is an aggressive treatment (share-based compensation is a real cost), but the amount is small

Return on Capital:

• ROIC estimate (NOPAT/Invested Capital): FY2025 approx. 18.4% (this report estimate), above WACC (11%), but significantly lower than FY2024's approx. 68% (low equity base pre-IPO). ROE dropped from 68% to 19%, same direction. The key question is whether the approx. US$400 million raised in IPO can be effectively deployed into high-return capacity expansion.

Maintenance CapEx Scrutiny:

• CapEx/Depreciation: FY2024 4.0x, FY2025 5.0x, persistently well above the 1.5x warning line. This reflects expansionary investment (net addition of 1 factory and 18 lines) rather than maintenance—a normal phenomenon for growth companies in capacity building phase, but need to monitor whether returns on new capacity materialize as expected.

Moat / Red Flags:

• Moat: Three layers—① Localized production (avoids tariffs + logistics costs); ② Deep distribution network (12 countries, 18 sales branches, 2,550+ wholesalers/distributors, repurchase rate 92%–96%); ③ Brand awareness (89%–95%, high brand stickiness among African consumers)
• Red Flags: ① Weakening OCF conversion (receivables/inventory growing faster than revenue); ② R&D spending only 0.2% of revenue (4-person team), raising questions about long-term product competitiveness; ③ Top two distribution channels (wholesalers 61% + distributors 35%) account for 96% of total, concentrated channel structure

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VI. Management Assessment

Walk-the-talk Consistency: Partial delivery. Prospectus promised expansion into Latin America/Central Asia → FY2025 Latin America revenue +134% to US$22 million, Peru factory operational April 2026; promised capacity expansion → net addition of 1 factory and 18 lines, CapEx from US$32.87 million to US$52.37 million. However, Central Asia (Kazakhstan) disclosure is minimal with no material progress seen. Assessment: Pragmatic, not over-promising type.

Shareholder Friendliness: Neutral-to-positive. ① FY2025 proposed first final dividend of US$0.0888/share, payout ratio 45%, but note controlling shareholder couple holds approx. 54.6%, with approx. US$30 million flowing to the controlling shareholder; ② Controlling shareholder Yang Yanjuan accumulated purchases of 7.262 million shares (approx. 1.17% of share capital) during April–June 2026, at average price of approx. HKD 26–29, sending a confidence signal; ③ FY2024 loan of US$1.0 million to related party Chaoyuet Holding was fully repaid in January 2025, related-party transactions cleaned up.

Risk Signals: ① On November 10, 2026, controlling shareholder (Shen Yanchang 332 million shares) and employee platform together representing approx. 67% of shares unlock—the single largest potential supply overhang; ② Cornerstone investors (15 names, approx. 41.2 million shares, 45.31% of offering) unlocked on May 10, 2026; during the lock-up expiry window, the stock price fell from approx. HKD 36 to approx. HKD 25 (decline of approx. 30%); ③ Pre-IPO, the China Securities Regulatory Commission requested supplementary explanations on equity structure compliance and overdue social insurance contributions (approx. US$1.6 million total for 2022–2024 first three quarters).

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VII. Business Segment Breakdown

Profit Main Segment: Baby Care contributes approx. 78.6% × 35.3% = 27.7% revenue margin, absolute profit approx. US$157 million, the absolute profit engine. Feminine Care contributes approx. 17.5% × 36.7% = 6.4%, absolute profit approx. US$36.4 million. Home Care, despite highest gross margin (43.7%), has minimal share (3.9%), with profit contribution approx. US$9.7 million.

Gross Margin Structure Differences: Home Care (43.7%) vs Baby Care (35.3%), gap 8.4pp. Wet wipes have more room for product differentiation and stronger brand premium, but market size is limited. Baby Care's relatively lower gross margin reflects a "volume for price" strategy—Leshi's diaper average price is approximately US$0.0927 per unit, lower than P&G's Pampers at approx. US$0.1158 per unit.

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VIII. Financial Engineering and Cross-period Consistency

Accounting Red Flags:

1. Inventory growth (+19.7%) faster than revenue growth (+24.9%), yet no provision for inventory write-down—emerging market consumer goods carry higher obsolescence risk, no write-down may be optimistic (Severity: Medium)
2. Prepayments and other receivables +72.5% to US$29.9 million, growth rate far exceeding revenue—likely prepayments for equipment (capacity expansion) or deposits, need to monitor recoverability (Severity: Low)
3. Foreign exchange gain of US$5.4 million represents 3.7% of pre-tax profit, a non-operating volatile item; adjusted profit better reflects underlying operating trends (Severity: Low)

Cross-period Consistency:

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IX. Valuation and Payoff

Current Market Data and Multiples Percentile

Market Implied Expectations

The current price of HKD 29.28 (market cap USD 2.32 billion) implies market expectations of FY2026E net profit of approximately USD 140 million and growth of about 15%. Comparison with reality: ① FY2026H1 preliminary announcement shows adjusted net profit ≥ USD 75 million (+47%), annualized could exceed USD 150 million; ② Consensus estimates for FY2026E net profit range from USD 137–149 million. The growth rate implied by market pricing (approx. 15%) shows a clear gap versus the company's preliminary growth (H1 annualized +47%) – if H2 does not see a major reversal, consensus estimates have upside room.

Three-Layer Value (EPV)

EPV zero-growth floor of HKD 19.40 means that even with zero future growth, current earnings support about 66% of the current price. The growth option accounts for 33.8%, which is not aggressive for a company growing at 15%–20%.

Three Scenarios + Odds

Market's most pessimistic pricing: the stock fell to HKD 24.96 on June 26, 2026 (implied PE approx. 13.9x), landing at the upper end of the bear case range of HKD 21–25. Currently, the lowest sell-side target is Southwest Securities at HKD 34.23 (Buy), and no sell-side has issued a negative rating. The bear case range of HKD 21–25 already covers the actual pessimistic price range traded in the market.

Base-case exit multiple anchor: 17x FY2027E PE, compared with Hengan International 10x (saturated Chinese market, low growth), Kimberly-Clark 18x (mature global market, 2% growth), and Procter & Gamble 21x (global leader, zero growth). Leshushi's growth rate (15%–20%) sits between mature companies and high-growth firms, with emerging market risk discount offsetting growth premium – 17x is a reasonable range.

In-House Estimates vs Management Guidance vs Consensus

FY2026E forecast is above management's "mid-teens" guidance, as H1 preliminary already achieved +28%/+47%, making a full-year beat highly likely. Key uncertainties: raw material cost pass-through in H2, African currency fluctuations.

Valuation Conclusion

Judgment: Reasonably undervalued. Strong fundamentals (African volume leader, localization moat, ample net cash) but not flawless (weaker OCF conversion, ROE dilution, small LatAm presence). Current price HKD 29.28 corresponds to FY2026E PE of 16.6x and PEG of 1.14x, in the reasonably cheap range among growth consumer staples. Target price HKD 35–40 (base case), margin of safety approx. +20%. Note that emerging market risk premium and liquidity discount imply a valuation ceiling below developed market comparables.

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10. Industry Panorama and Competitive Landscape

Industry Space

The African disposable hygiene product (baby diapers/pull-ups/sanitary pads) market was approximately USD 3.8 billion in 2024 (Frost & Sullivan, paid report), with a 2024–2029E CAGR of about 7.9%, projected to reach USD 5.6 billion by 2029. Growth is driven by three slow-moving variables: ① Demographics – Over 50% of Africa's population is under 20, with approximately 42–44 million births annually (UNFPA), representing 36% of global births; ② Penetration increase – Baby diaper penetration about 20% (vs. 70%–90% in mature markets), sanitary pads about 30% (vs. 86%–92% in mature markets); ③ Urbanization and income growth – Africa's urbanization rate about 43%, per capita GDP expected to grow from USD 1,360 in 2024 to USD 1,790 by 2030 (CAGR 4.7%).

The Latin American baby diaper market is about USD 7.3 billion, and the feminine hygiene market (including MEA) about USD 1.6 billion (Grand View Research), with slower growth than Africa (CAGR 5%–6%) but larger absolute size. The global baby diaper market is approximately USD 83.3 billion in 2025.

Data source caution: Frost & Sullivan is the industry advisor hired by Leshushi for its IPO; the paid custom report inherently carries optimistic bias in penetration rates and growth data. Independent third-party data from EuroMonitor or Euromonitor on African hygiene products are not yet publicly available. Investors should treat the 7.9% industry CAGR as an upper bound reference.

Industry Chain and Value Distribution

Upstream: SAP (Super Absorbent Polymer), fluff pulp, non-woven fabric, PE film and other chemical raw materials, accounting for over 85% of production costs. Global SAP/fluff pulp capacity is concentrated in North America, Western Europe, and China, with almost no upstream capacity in Africa. Leshushi centralized procurement through Dubai-based Sunmart, with moderate bargaining power upstream (commodity pricing).

Midstream: Manufacturing + brand operations. Leshushi operates 9 factories across 8 African countries, with total design capacity of 6.3 billion diapers/year and 2.9 billion sanitary pads/year. Local production avoids 15%–25% import duties on finished goods – a core competitive advantage.

Downstream: Dominated by traditional offline channels – wholesalers (61%), distributors (35%), supermarkets/retailers (4%). End consumers are price-sensitive low-to-middle-income households. Brand gross margin around 35% (Leshushi), much higher than upstream raw material suppliers (approx. 10%–15%) and downstream channel players (approx. 5%–10%).

Gross profit allocation: Gross profit is retained mainly at the brand level. Leshushi's consolidated gross margin of 35.9% is lower than Procter & Gamble (approx. 46%) and Hengan's sanitary pads (58%–64%), reflecting its volume-for-price strategy.

Supply-Demand and Competitive Landscape

Demand: Approximately 42–44 million new babies annually (Africa) drive staple demand for diapers; improving menstrual hygiene awareness + government initiatives (e.g., Ghana's free sanitary pad program) drive sanitary pad penetration.

Supply: Limited local production capacity in Africa; over 80% reliance on imports. Leshushi has the most local factories (9 in 8 countries). Among international brands: Procter & Gamble has capacity in South Africa/Egypt; Kimberly-Clark built a plant in Nigeria (USD 100 million, 2024); Turkey's Hayat Kimya has a presence in Nigeria.

Concentration: African baby diaper CR5 approx. 61% (volume basis, 2024): Leshushi 20.3% > P&G 17.4% > Hayat ~9% > K-C ~9%. Sanitary pads CR5 approx. 40%: Leshushi 15.6% > P&G 10.8%. Medium-high concentration, but Leshushi leads by volume – by revenue, P&G leads (diaper revenue share 20.7% vs Leshushi 17.2%), reflecting Leshushi's lower unit price.

Entry Barriers: ① Capital barrier (single production line costs millions to tens of millions USD); ② Channel barrier (fragmented offline channels in Africa require years to build); ③ Brand awareness barrier (Leshushi's core brand awareness 89%–95%); ④ Localization operational barrier (multi-country political/legal/tax/forex complexity).

Substitution Threat: Traditional cloth diapers (still widely used in low-income areas); local cottage industry cheap alternatives (informal channel products account for about 15%–25% in West African markets).

Cycle and Regulation

The industry is in an early growth stage, with African market penetration rates of only 20%–30%, comparable to China in the late 1990s to early 2000s. No typical cyclical fluctuations. Leading indicators include: newborn numbers, urbanization rate growth, per capita disposable income trends, and tariff policies on hygiene products.

Regulatory direction: Neutral-to-positive – African countries welcome local production (tariff concessions/duty-free raw materials); Ghana and others list sanitary pads as a public health priority; China grants zero-tariff treatment to 33 least developed African countries (effective December 2024), with limited impact on Chinese companies already producing in Africa; foreign exchange controls in some African countries (e.g., Nigeria's "de-dollarization" policy in May 2026) are risks to monitor.

Peer Comparison

Company Industry Positioning

Leader – #1 by volume in both African baby diapers and sanitary pads. Overall share trend is upward: baby diaper volume share from 20.0% in 2023 to 20.3% in 2024; sanitary pads from 14.0% to 15.6%. However, revenue share (17.2%/11.9%) is lower than volume share, confirming the "volume-for-price" strategy. Moat sources: local capacity barriers + deep channel network + brand awareness.

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11. Overall Conclusion and Tracking

Overall Rating: Cautiously bullish, confidence level 0.55. Leshushi is the most moated local champion in the African hygiene market, in an industry at an early penetration growth stage, with strong FY2026H1 preliminary results. Current price HKD 29.28 corresponds to FY2026E PE 16.6x and PEG 1.14x – valuation is reasonably cheap but not deeply undervalued – must factor in emerging market risk premium and liquidity discount.

Core Risks: ① FX – Volatility in 30+ emerging market currencies; FY2025 forex gain USD 5.4 million but FY2024 loss – direction unpredictable; ② Competition – P&G/K-C accelerating local plant building in Africa, potentially narrowing cost gap over 3–5 years; ③ Lock-up expiry – Approximately 332 million shares from controlling shareholder due for release in November 2026 (53.4% of total shares), currently the biggest technical overhang; ④ Raw materials – SAP/fluff pulp prices affected by crude oil volatility, cost pressure may gradually emerge in H2 2026.

Tracking Points & Catalyst Calendar:

• Interim Results (end of August 2026): Official half-year report exceeding the preliminary upper bound (adjusted net profit ≥ USD 75 million) is the most important near-term catalyst; if exceeded, it will trigger upward sell-side estimate revisions.
• Ghana Government Sanitary Pad Order: Plans to invest over GHS 800 million in 2026–2029; Leshushi, as a key local supplier, is likely to benefit continuously.
• Controlling Shareholder Lock-up Expiry (November 10, 2026): Shen Yanchang's 332 million shares plus employee platform total about 67% equity lock-up release – the biggest uncertainty over the next 6 months. Whether the actual controller continues to buy back or commits not to sell will be a key signal.
• Peru/El Salvador Factory Ramp-up: Whether LatAm can contribute over 5% of revenue in 2026–2027, testing the core assumption that the "Africa model is replicable".
• Raw Material Cost Pass-through: H2 SAP/fluff pulp price trends will directly impact gross margin; monitor the company's pricing power.

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This report is based on public information and financial model analysis and does not constitute investment advice. Valuations rely on multiple assumptions (FX, raw material prices, capacity utilization), and actual conditions may deviate materially. Emerging market investments require additional attention to political, FX, and liquidity risks.