[ET Net News Agency, 19 April 2018] UBS Global Research lifted its target price for WH
Group (00288) to HK$10.23 from HK$8.55, and upgraded its rating to "buy" from "neutral" on
limited downside from China's new tariff on US pork imports in addition to an improved
China growth outlook.
The research house expects persistent weakness in hog prices in China to benefit WH's
China packaged meat and fresh pork divisions in 2018/19, while organizational/channel
restructuring driven by new management should drive its China packaged meat volume growth.
After WH's recent share price underperformance related to China/US trade war concerns,
UBS views its valuation as attractive, trading at 7x minority interest-adjusted 2019
EV/EBITDA, significantly below China/global peer averages of 10-11x. WH offers the highest
dividend yield of 5% in our coverage universe.
UBS thinks a potential dividend hike on the back of WH's resilient balance sheet and
strong cash-flow could serve as a catalyst in 2018, as its M&A activities slow and it
focuses on utilisation improvements at newly acquired European plants. (KL)