Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

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Credit

<ul>
<li>Health and Happiness' (H&amp;H) FY 2024 results were soft, as the company continued to report weaker earnings and margins from the Baby Nutrition &amp; Care (BNC) business in Mainland China.</li>
<li>The weakness was only partly offset by continued growth in the Adult Nutrition &amp; Care (ANC) and Pet Nutrition &amp; Care (PNC) segments.</li>
<li>Positively, management guided for the infant milk formula business in Mainland China to improve during H1/25 (after a 25% revenue decline in FY 2024), supported by completion of the transition to new Guobiao regulatory standards as well as continued market share gains.</li>
</ul>


Health and Happiness' (H&amp;H) FY 2024 results were soft, as the company continued to report weaker earnings and margins from the Baby Nutrition &amp; Care (BNC) business in Mainland China.
The weakness was only partly offset by continued growth in the Adult Nutrition &amp; Care (ANC) and Pet Nutrition &amp; Care (PNC) segments.
Positively, management guided for the infant milk formula business in Mainland China to improve during H1/25 (after a 25% revenue decline in FY 2024), supported by completion of the transition to new Guobiao regulatory standards as well as continued market share gains.


Health And Happiness (H&H) - Earnings Flash - FY 2024 Results - Lucror Analytics

<ul>
<li>In today's Morning Views publication we comment on developments of the following high yield issuers: Health and Happiness (H&amp;H), Geely Automobile</li>
<li>In the US, the January trade deficit surged to a record high of USD 131.4 bn (USD 128.8 bn e / USD 98.1 bn p).</li>
<li>Imports soared 10% to a record USD 401.2 bn (amid front-loading of imports ahead of tariffs), while exports rose 1.2% to USD 269.8 bn. </li>
</ul>


In today's Morning Views publication we comment on developments of the following high yield issuers: Health and Happiness (H&amp;H), Geely Automobile
In the US, the January trade deficit surged to a record high of USD 131.4 bn (USD 128.8 bn e / USD 98.1 bn p).
Imports soared 10% to a record USD 401.2 bn (amid front-loading of imports ahead of tariffs), while exports rose 1.2% to USD 269.8 bn. 


<ul>
<li>Health and Happiness' (H&amp;H) proposed tender offer and new notes issuance will extend its debt maturity profile and alleviate debt repayment pressure in FY 2026.</li>
<li>In our view, the high tender offer price of 109.8 is to incentivise bondholders to tender and subscribe to the new notes.</li>
<li>We see fair value for the proposed notes at c. 8%.</li>
</ul>


Health and Happiness' (H&amp;H) proposed tender offer and new notes issuance will extend its debt maturity profile and alleviate debt repayment pressure in FY 2026.
In our view, the high tender offer price of 109.8 is to incentivise bondholders to tender and subscribe to the new notes.
We see fair value for the proposed notes at c. 8%.


Health And Happiness - Event Flash - Launches Tender Offer And Concurrent Notes Issuance

Analyst

Steve

Equity Bottom-Up

Health And Happiness (H&H) / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/health-and-happiness-h-h-int" target="_blank" data-smartkarma-citation="entities:20582:1" rel="noopener">Health And Happiness (H&amp;H) (1112 HK)</a> has transformed from an infant formula company to a nutritional supplements company.</li>
<li>The company currently trades at 5.3x 2024E PE - still valued as a Chinese infant formula company and not a growing and more global nutritional supplements company.</li>
<li>As the company continues to deliver growth in the nutritional supplements business, rerating will come eventually. </li>
</ul>



Health And Happiness (H&amp;H) (1112 HK) has transformed from an infant formula company to a nutritional supplements company.
The company currently trades at 5.3x 2024E PE - still valued as a Chinese infant formula company and not a growing and more global nutritional supplements company.
As the company continues to deliver growth in the nutritional supplements business, rerating will come eventually. 


Health And Happiness (1112 HK):  Strong Growth From Nutritional Supplements

Health and Happiness International's (H&H) H1/24 results were in line with expectations. The company reported weaker earnings and margins from its main Baby Nutrition & Care (BNC) business in Mainland China, amid structural industry challenges stemming from low birth rates in the country. That said, the weakness in BNC was partly offset by growth in the Adult Nutrition & Care (ANC) and Pet Nutrition & Care (PNC) segments. We note that ANC is now H&H's largest revenue contributor, eclipsing BNC's numbers. Going forward, we expect the company to continue expanding the ANC and PNC segments in Mainland China and beyond, while seeking to contain the revenue decline at BNC and maintain stable margins for the segment. H&H has reduced inventory days and generated a small working-capital inflow, which led to positive FCF generation and net debt reduction. The company has adequate liquidity, following its successful refinancing activities in July.

  Health and Happiness International's (H&H) H1/24 results were in line with expectations. The company reported weaker earnings and margins from its main Baby Nutrition & Care (BNC) business in Mainland China, amid structural industry challenges stemming from low birth rates in the country. That said, the weakness in BNC was partly offset by growth in the Adult Nutrition & Care (ANC) and Pet Nutrition & Care (PNC) segments. We note that ANC is now H&H's largest revenue contributor, eclipsing BNC's numbers. Going forward, we expect the company to continue expanding the ANC and PNC segments in Mainland China and beyond, while seeking to contain the revenue decline at BNC and maintain stable margins for the segment.   H&H has reduced inventory days and generated a small working-capital inflow, which led to positive FCF generation and net debt reduction. The company has adequate liquidity, following its successful refinancing activities in July. 

Health And Happiness (H&H) - Earnings Flash - H1 FY 2024 Results - Lucror Analytics

China

Health and Happiness H&H International Holdings Ltd provides health care supplements. The Company offers pediatric nutritional and baby care products. Health and Happiness H&H International Holdings serves nutrition and wellness industries worldwide.

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Health And Happiness (H&H) (1112 HK)

Health And Happiness (H&H) - Earnings Flash - FY 2024 Results - Lucror Analytics

Health and Happiness' (H&H) FY 2024 results were soft, as the company continued to report weaker earnings and margins from the Baby...

Lucror Analytics

Lucror Analytics - Morning Views Asia

In today's Morning Views publication we comment on developments of the following high yield issuers: Health and Happiness (H&H), Geely Automobile

Lucror Analytics

Health And Happiness - Event Flash - Launches Tender Offer And Concurrent Notes Issuance

Health and Happiness' (H&H) proposed tender offer and new notes issuance will extend its debt maturity profile and alleviate debt repayment...

Lucror Analytics

Health And Happiness (1112 HK): Strong Growth From Nutritional Supplements

Starting To Get Recognized! Share price up 20% after 3Q23 operating results came out at noon today. Adult nutritional supplements grew 27% yoy...

Steve

Health And Happiness (H&H) - Earnings Flash - H1 FY 2024 Results - Lucror Analytics

Health and Happiness International's (H&H) H1/24 results were in line with expectations. The company reported weaker earnings and margins...

Lucror Analytics

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