- Buy Entry – 5.55 Target – 6.20 Stop Loss – 5.25
- WH Group Ltd is an investment holding company mainly engaged in the pork business. The Company operates its business through three segments. The Packaged Meats segment is engaged in the production, wholesale and retail of low temperature and high temperature meat products. The Pork segment is engaged in the slaughtering, wholesale and retail of fresh and frozen pork and hog farming businesses. The Others segment is engaged in the slaughtering and sales of poultry. The Segment is also engaged in the sales of ancillary products and services such as provision of logistics services, manufacturing of flavouring ingredients and natural casings, manufacture and sales of packaging materials, operating finance companies, property development companies, a chain of retail food stores, sales of biological pharmaceutical materials, trading of meat related products and others.
- Live pig price surged in 2Q22. As of 20th July, the average live pig price arrived at RMB22.51/kg, up 35.2% MoM. The rise in pig prices occurred after the recent reopening of schools, factories, and restaurants, which caused an increase in pork consumption, coupled with a decrease in imports and slaughtering of pigs.
Pig price in China – Live
Source: Pig333.com
- 1Q22 results review. Total operating income dropped by 24.7% YoY to RMB13.8bn. Net profit dipped by 1.6% YoY to RMB1.5bn. The operating margin increased by 3.6ppts to 13.8%. Shuanghui Development’s external sales volume of meat products increased by 1.8% YoY to 0.76mn metric tonnes. The company will be announcing the 1H22 interim results on 16th August.
- The updated market consensus of the EPS growth in FY22/23 is 72.5%/6.1%% YoY, respectively, translating to 7.1×/6.7x forward PE. The current PER is 9.8x. FY22F/23F dividend yield is 6.1%/7.1% respective. Bloomberg consensus average 12-month target price is HK$7.93.
(Source: Bloomberg)