Mavis Hui, an analyst from DBS, maintained the Buy rating on WH Group Limited (WHGRF – Research Report). The associated price target is HK$5.34.
Mavis Hui has given WH Group Limited a Buy rating due to a combination of factors that suggest a positive outlook for the company. The packaged meat segment in China is expected to maintain a strong profit, driven by sustained per-tonne profit margins despite potential sales volume pressures. This resilience is underpinned by the company’s strategic management of frozen pork inventory and the anticipation of profit improvements from rising hog prices.
In addition to the robust Chinese market, sequential improvements in the US operations contribute to the Buy rating. The US pork business is set for margin recovery, thanks to lower hog/pork prices and operational efficiency gains, which are likely to continue into 2024. Furthermore, WH Group’s expansion in Europe, bolstered by strategic acquisitions such as the purchase of Spanish meat producer Argal, is poised to support the company’s overall growth. Despite revising the target price slightly downward due to near-term margin pressure in the US pork segment, the overarching positive trend and potential strategic repositioning provide a compelling case for the Buy recommendation.
According to TipRanks, Hui is a 2-star analyst with an average return of 0.2% and a 53.85% success rate. Hui covers the Consumer Cyclical sector, focusing on stocks such as Samsonite International SA, Luk Fook Holdings (International), and Sun Art Retail Group.
In another report released on January 31, Jefferies also maintained a Buy rating on the stock with a HK$5.84 price target.
See the top stocks recommended by analysts >>
TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.
WH Group Limited (WHGRF) Company Description:
WH Group, listed on the Hong Kong exchange, is a holding company and the world’s largest vertically integrated producer of pork and related packaged meat products. Its revenue is mainly derived from activities undertaken by its China and U.S. operations, which are respectively via 70.3%-owned Henan Shuanghui Investment & Development Co., or Shuanghui, and wholly owned Smithfield Foods Inc. In the U.S., its key packaged meats brands, in which it has an 8% market share, include Nathan’s hot dogs, Armour, John Morrell, and Curly’s, while in China, products are mainly under the Shuanghui brand, where it also has a 32% market share. we expect the company’s operating profit to be split almost equally between the U.S. and China going forward with a small contribution from Europe.
