China Jianyin Investment International released a research report stating that it maintains a "Outperform" rating for WH GROUP (00288), while lowering the profit forecasts for this year and next by 5% and 3% respectively. The Target Price is decreased from 7.5 HKD to 7.2 HKD. The upstream production cuts of WH GROUP in the USA are in line with expectations, and the suggested spin-off of Smithfield is becoming clearer, with the aim of increasing dividend per share in the coming years.
The bank stated that it has raised its forecast for the company's fourth quarter operating profit margin in the USA from 7.9% to 8.1%. Additionally, weak demand in China is putting pressure on the Pork market. The price of live pigs from October to November decreased by 7.7% compared to the third quarter, underperforming expectations, and it is expected to decline by the third quarter of 2025. The drop in live pig prices will erode the operating profit margin of the Pork sector. The bank has lowered its forecast for the operating profit margin of the Pork business in mainland China for the fourth quarter of 2024 from 10.3% to 9%.