WH GROUP(288.HK):IMPROVEMENT IN 1Q24 FUNDAMENTALS BODES WELL FOR RE-RATING
WH GROUP(288.HK):IMPROVEMENT IN 1Q24 FUNDAMENTALS BODES WELL FOR RE-RATING
WHG had a resilient 1Q24 as NP jumped 140% YoY to US$465m. Although China business suffered from a continuous drag from low pork price, business in the US has shown strong signs of turnaround. This should be supportive to the overall earnings of 2024, and we expect YoY growth to be strong due to a low base in 2023. We expect the improvement of US business would also help the re-rating of WHG, as the spin-off of Smithfield is still on the table. Maintain BUY.
WHG在24年第一季度表現強勁，國民生產總值同比上漲140％，至4.65億美元。儘管中國業務受到豬肉價格低迷的持續拖累，但美國的業務已顯示出強烈的轉機跡象。這應該會支撐2024年的整體收益，我們預計，由於2023年基數較低，同比增長將強勁。我們預計，美國業務的改善也將有助於WHG的重新評級，因爲史密斯菲爾德的分拆仍在討論之中。維持買入。
Key Factors for Rating
評級的關鍵因素
Strong YoY of 1Q24 NP due to a low base. Although WHG recorded an 8% decline of revenue, NP jumped 140% YoY to US$465m, slightly exceeding market expectations. Key driver for the improvement of profitability is the turnaround of the US operations, as its EBIT jumped 903% YoY to US$622m. Such improvement reflected narrowing losses of US hog farming business and improving slaughtering profits. However, 1Q24 overall NP was still weaker than 1Q21 & 1Q22, reflecting some drags from China business and the US operations not yet fully recovered.
由於基數較低，24年第一季度NP同比強勁。儘管WHG的收入下降了8％，但NP同比增長了140％，至4.65億美元，略高於市場預期。盈利能力提高的關鍵驅動力是美國業務的轉機，其息稅前利潤同比增長903％，至6.22億美元。這種改善反映了美國生豬養殖業務損失的縮小和屠宰利潤的提高。但是，24年第一季度的整體國民生產總值仍低於21年第一季度和22年第一季度，這反映了來自中國業務的部分拖累，美國業務尚未完全恢復。
Further improvement in the US operations expected. Mgmt. expected the profitability of US operations should further improve in the following quarters in 2024, as US hog cycle is bottoming while feed cost is favourable. Hence, they are confident to achieve profits for their upstream business in 2Q24 & 3Q24, when this dragged WHG's profits in 2023. Meanwhile, they will remain committed to scaling down their upstream operations. We believe this should be favourable to their long-term stability of profits, and also the valuation of Smithfield if WHG still pushes for a spin-off.
預計美國業務將進一步改善。Mgmt.預計，隨着美國生豬週期觸底而飼料成本有利，美國業務的盈利能力將在2024年接下來的幾個季度進一步提高。因此，他們有信心在24年第二季度和第二季度實現上游業務的利潤，而這拖累了WHG在2023年的利潤。同時，他們將繼續致力於縮小上游業務。我們認爲，如果WHG仍在推動分拆的話，這應該有利於他們的長期利潤穩定，也將有利於史密斯菲爾德的估值。
China business still challenging but optimistic on 2H24. The profitability of China operations suffered, as fresh pork segment suffered from unfavourable demand of frozen imported meat. While low pork price also dragged the revenue in 1Q24, mgmt. expected this will continue to support the earnings of packaged meat business, and sales volume should also improve in 2H24 due to a low base and its initiatives to boost sales.
中國業務仍然充滿挑戰，但對下半年持樂觀態度。由於新鮮豬肉板塊受到冷凍進口肉類不利需求的影響，中國業務的盈利能力受到影響。儘管低豬肉價格也拖累了24年第一季度的收入，但mgmt預計這將繼續支持包裝肉類業務的收益，由於基數低及其促進銷售的舉措，24年下半年的銷量也將有所改善。
Key Risks for Rating
評級的主要風險
Hog prices in China rising faster than expected; worse-than-expected recovery in the US pork industry; sharp rise in feed cost and lower-than-expected consumer demand in packaged meat products.
中國的生豬價格上漲速度快於預期；美國豬肉行業的復甦低於預期；飼料成本急劇上漲，消費者對包裝肉類產品的需求低於預期。
Valuation
估價
We expect the improvement of US business should help re-rating, which has already happened to global peers. We raise our TP to HK$6.5, based on 9x 2024 P/E (previous: 8x).
我們預計，美國業務的改善將有助於重新評級，全球同行已經發生過這種情況。根據2024年市盈率的9倍（前值：8倍），我們將目標股價提高至6.5港元。
譯文內容由第三人軟體翻譯。