Tissue and personal products maker Asaleo Care (AHY.AU) may...

Tissue and personal products maker Asaleo Care (AHY.AU) may
become more conservative about capital management in the wake of Friday's profit
warning, says Citi. Asaleo Care now expects underlying net profit in the year through
December to fall by around 15%, having previously forecast a result in line with the 2015
financial year. It blames factors including aggressive discounting by rival producers of
toilet paper and higher pulp costs. Citi says Asaleo Care has bought back about 8% of its
issued capital since August 2015 at an average price of A$1.71. "While the company
has buyback capacity, we expect the focus to be on maintaining a dividend payout of 10
cents per share," Citi says. "The payout policy is 70%-80% of EPS, but a higher
payout can be sustained reflecting the free cash flow generation." It keeps a
neutral call on Asaleo Care, but lowers its price target by 26% to A$1.60/share. AHY last
traded at A$1.48.

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