[ET Net News Agency, 18 July 2019] Goldman Sachs lowered its target price for WH Group
(00288) to HK$10.1 from HK$10.3 and maintained its "buy" rating.
WH Group is slated to report 1H/2Q results on 13 August. For 2Q alone, the research
house expects a 6% decline in operating profits (China down 23%, the US up 11%). This is
mainly dragged by the declining China business, resulting from rising hog and chicken
prices.
However, Goldman believes the recovering US business as supported by improving hog
production profits would partially offset the decline in 2Q.
But Goldman remains positive on WH Group's 2H and 2020 outlook, given: (1) US exports to
grow, (2) Positive outlook on US profitability, and (3) China packaged meat price hike to
partially offset cost pressure.
Goldman factored in the latest China hog and chicken price assumptions, and it believes
WH Group would be a net beneficiary due to the rising China import demands from the US and
elsewhere globally.
It revised down slightly our 2019-21 EPS forecasts for WH Group by 1%-2% on the back of
lower China packaged meat margins and lower US hog production margins. (KL)