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DHG [MARKET PERFORM -6.5%] - Competitive headwinds hurting sales - Update

We upgrade our rating to MARKET PERFORM as the stock has declined 7% since our last update. In our view, DHG is fully valued at 2018F PER of 19.8x given benign growth prospects. We keep our TP unchanged as a downward NPAT revision is offset by a roll-over in valuation. Q3 2017 in-house product sales declined 5% YoY, which undershot our expectation. For 9M 2017, in-house product sales fell 1% YoY, reflecting the challenging competitive environment.