听力学：在波涛汹涌中航行

Issuer of report:HSBC Securities and CapitalMarkets (India) Private LimitedView HSBC Global Research at:https://www.research.hsbc.comListen to our insightsFind out moreHSBC Global Research PodcastsUpside/Market capFY1FY2downside(USDm)PE (x)PE (x)38.9%4965.618.916.220.5%8589.420.417.05.5%2164.112.29.81.2%20277.525.622.0Shubhangi Gupta*, Ph.D.Analyst, Life Sciences & Healthcare ResearchHSBC Securities and Capital Markets (India) Private Limitedshubhangi.gupta@hsbc.co.in+91 80 4555 2143Rajesh Kumar*Head, European Life Sciences & Healthcare ResearchHSBC Bank plcrajesh4kumar@hsbcib.com+44 20 7991 1629Sezgi Oezener*, CFAAnalyst, Life Sciences & Healthcare ResearchHSBC Continental Europe SA, Germanysezgi.oezener@hsbc.de+49 211 9103290* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and isnot registered/ qualified pursuant to FINRA regulationsEquitiesHealth Care Equipment &SuppliesDeveloped Markets Current_______TP______________Rating______price19.44265.6094.80281.70 ◆◆◆OldNewOldNew30.0027.00BuyBuy330.00320.00BuyBuy90.00100.00HoldHold290.00285.00BuyHold FY3PE (x)14.514.98.319.9 What is the market expecting?WithUS consumer confidence weak and US commercial markets soft, the hearing aids (HA)companies have revised their outlooks (Demant and GN, in particular), with some seeinglowervalue growth (Demant and Sonova) in 2025.There are expectations of a recovery in EMEA, ledby France, and here companies remain confident on tracking signals, seeing mid to high-singledigit growth in France in 2025. Overall, FY25-27 consensus revenue growth expectations aredepressed compared tohistory, especially for GN StoreNord.On the other hand, consensusdrop-through margin expectations are more optimistic.Consensus org growth expectations forFY25-27 are depressedvshistoryHowever, consensus drop-through marginexpectations are elevatedvshistorySource: Visible AlphaSource:VisibleAlphaHSBC viewWehave argued previously that margins in audiology are likely to beweak in 2025(Audiology: Mindthe margin gap, 17 Feb 2025),and there have been profit warnings from GN and Demant in May2025. We had also highlighted Sonova’s de-rating on concerns over US consumer confidence andtariffs(MedTech and Life Sciences: Exploring risk/reward: Scenario analysis, 25 Apr 2025).0%2%4%6%8%10%12%14%16%Amplifon SpADemant A/SGN Store NordSonovaCAGR (2014-19a)Consensus CAGR (2025-27e)0%5%10%15%20%25%30%35%40%Amplifon SpADemant A/SGN Store NordMedian (2014-19a)Consensus Median (2025-27e)Navigating rough waters◆Soft US markets, weak US consumer confidence,andmarginpressureare allheadwinds for the sector◆Prefer Demant(Buy, new TP DKK320)–we think its potential to winback market share might be under-appreciated◆Downgrade Sonovato Holdfrom Buy;retain Buy on Amplifon andDemant,and Hold on GN; adjustTPs Sonova 3HA players have seen negative share price performancesin the last 12 months, except forSonova. The weakness has been driven both by EPS and PE. Sonova is currently trading atthehighest FY3 PE multiple and GN at the lowest.EPS vs PE contribution to share priceperformanceFY3 PE vs FY3 EPS growth for HA peersSource: LSEG WorkspaceSource:LSEGWorkspaceGN and Demant havethe largest exposure to US revenues.However, GN is more cyclical andgrowth expectations for GN enterprise, gaming and consumer business segments are lowerthanUS peerLogitech(LOGI US,CMP USD86.55, not covered),whichcould indicate GNlosing market share. Due to the cyclical nature of GN’s business, we remain cautious on thestock as US consumer sentiment remains weak.Constant currency growth expectations forGN are lower than peer LogitechUS sales exposure is highest for GN andDemant(last reported)Source: Visible AlphaSource: HSBC estimates, Company. *For GN, we assume USA to be 90% of NorthAmerican revenues and for Amplifon, we assume 90% of American revenues to beUSA. Therevenue figures usedare from the last reported financial year of thecompaniesWitharecoveryseenin EMEA, Amplifon marginscouldimprove as it has the largest revenueexposure to EMEA.Although US commercial markets have been weak,theUS Department of Veteran Affairs (VA)hasreportedfluctuationsin HA unitsalesover the last twelve months. ASPs,on the otherhand,show overall flattish development. Sonova remains the largest supplier to VA,witha48%market share in HA.-70%-60%-50%-40%-30%-20%-10%0%10%GN.CODEMANT.COSOON.SAMPF.MI1 year share price change driver12 month fwd EPS change12 month fwd PE changeAMP IMDEMANT DCGN DCSOON SW0.0x5.0x10.0x15.0x20.0x25.0x0%5%10%15%20%25%FY3PEFY3EPS growth %-30.0%-20.0%-10.0%0.0%10.0%20.0%C1Q24C3Q24C1Q25C3Q25eGN-EnterpriseGN-Gaming and consumerLogitech revenue0%5%10%15%20%25%30%35%40%AMP IM*DEMANT DCGN DC*SOON SW Consensus EPSforecastshave seen downward revisionsin the last twelve months,especiallyfor Amplifonand GN. Although some companies have commentedthatApril showedbettertrends in the US compared to February-March2025, we see US consumer confidence declining.PE multiples for allof our covered HA stockse