Analyst Anne Ling of Jefferies maintained a Buy rating on WH Group Limited (WHGRF – Research Report), retaining the price target of HK$6.21.
Anne Ling has given her Buy rating due to a combination of factors, including WH Group Limited’s performance in the US market, which surpassed her expectations and effectively compensated for the weaker results in China. The US operations showed a significant reduction in losses from upstream and exhibited stronger profitability in the packaged meat segment. This positive trend aligns with the company’s strategic plan to enhance shareholder value through a potential initial public offering (IPO) of its US operations.
Moreover, Anne Ling’s optimism is bolstered by the company’s financial results, with a notable 73% year-over-year increase in net profit, despite a decrease in overall sales. The profit boost came primarily from the US pork segment’s successful efforts in reducing losses by scaling back hog production capacities. In addition, the management’s projections for the Chinese market indicate stability and growth in the packaged meat volume, along with expectations of maintaining low meat prices, which should lead to profits significantly surpassing their targets. These insights, combined with the expansion strategy and cost control measures in the US, underpin Ling’s positive outlook on WH Group Limited’s stock.
According to TipRanks, Ling is an analyst with an average return of -3.0% and a 37.76% success rate. Ling covers the Consumer Cyclical sector, focusing on stocks such as Samsonite International SA, Haidilao International Holding, and L’Occitane International SA.
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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.
