GTHT has issued a research report initiating coverage of H&H INTL HLDG (01112) with an "Accumulate" rating.
The brokerage forecasts the company's earnings per share for 2026-2028 to be RMB 1.63, RMB 1.88, and RMB 2.04, respectively. Taking into account the company's ongoing deleveraging and the rising share of its health supplement business, the firm believes that against the backdrop of an upward operating cycle combined with an improving debt cycle, the company is poised for a re-rating. GTHT initiates coverage with an 18x PE multiple for 2026, corresponding to a target price of HK$34.12 (based on 1 HKD = 0.86 CNY).
The main views from GTHT are as follows:
Health supplement business growing rapidly. The health supplement industry benefits from the silver economy, with long-term sector fundamentals remaining highly favorable. Swisse has become the number one health supplement brand in both mainland China and Australia. The brokerage is bullish on its ability to continue gaining market share within a fragmented landscape, based on: 1) Australia's stringent health supplement regulations enjoy a strong global reputation, and Swisse possesses elevated brand positioning; 2) Strong product R&D and innovation capabilities, having launched series such as Swisse Plus and LittleSwisse that deeply penetrate segmented consumer groups; 3) The company primarily sells through cross-border e-commerce, capturing the channel dividend from rising online penetration in health supplements, while also expanding into offline new retail channels with strong momentum such as Sam's Club.
Infant formula business recovering rapidly. The BNC business, after experiencing inventory destocking in 2023 and 2024 under the impact of new national standards, rapidly returned to strong growth in 2025 and the first half of 2026, with its market share in super-premium infant formula rising to 20.6% by the end of the first half of 2026. The brokerage attributes the growth drivers not only to competitors being hurt by additive-related incidents and channel restocking, but also strongly to the effective execution of the company's marketing initiatives focused on new mother education and stage 3 conversion strategies. Looking ahead, the firm is optimistic that the infant formula business will achieve steady growth, driven by channel restocking, improved value-for-money from the Star 2.0 product, and refined channel marketing management.
Pet business gradually improving. The NC business enjoys favorable long-term industry fundamentals. In the first half of 2026, the company's Zesty Paws actively pursued online and offline channel expansion in North America, achieving continued growth, while Solid Gold regained growth in North America after premiumizing its product portfolio. In the domestic Chinese market, Solid Gold experienced a temporary decline due to a proactive shift toward localized supply, with expectations for improvement going forward.
Debt situation continuing to optimize. Several major acquisitions in the past brought the company substantial debt and financial expense pressure. In recent years, the company has been reducing leverage through repaying debt principal and refinancing at lower interest rates. In the first half of 2026, total debt was reduced by RMB 1 billion, and the net leverage ratio dropped to 2.05x. The brokerage expects financial expenses to enter a downward trajectory going forward.
Risk warnings include food safety and intensified competition.