WH GROUP(288.HK):REITERATE BUY ON POTENTIAL SMITHFIELD LISTING
WH GROUP(288.HK):REITERATE BUY ON POTENTIAL SMITHFIELD LISTING
Risk factors: 1) Macroeconomic risk; 2)) Regulatory/policy risk; 3) Product quality/safety risk; 4) Risk of changing consumer taste; 5) Pork price remains low for an extended period; 6) Foreign exchange risk; 7) Interest rate risk; 8) Fluctuations in EPS and DPS growth; 9) Potential failure of Smithfield listing.Proposed spin-off of part of business of Smithfield Foods. WH Group announced a proposed spin-off of business of Smithfield Foods, Inc. operated in the U.S. and Mexico (Smithfield for short) for a separate listing on either the NYSE or the Nasdaq. WH Group has not specified the timeline or listing valuation. Some of the consumer goods companies have listed their subsidiaries in the US - a notable case would be Amer Sports (AS US) by Anta (2020 HK) in early 2024. We believe that successful listing of subsidiaries would encourage China's consumer goods companies to follow suit, strengthening their foreign presence and laying the groundwork for future global expansion.
萬洲國際計劃將Smithfield Foods公司部分業務進行拆分。該擬議拆分業務是指Smithfield Foods公司在美國和墨西哥（以下簡稱Smithfield）的業務，將在紐約證交所或納斯達克股票交易所上進行單獨上市。萬洲國際並未具體說明時間表和上市估值。一些消費品公司已在美國上市其子公司，其中值得注意的是安踏體育（美股代碼ASUS）於2024年初上市，後者爲安踏（2020年香港上市）的子公司。我們相信，成功上市子公司將鼓勵中國的消費品公司效仿，加強其海外存在，併爲未來的全球擴張打下基礎。
Pork segment weighed on recent performance. According to WH Group, Smithfield's revenue declined by 10.1% YoY and 8.1% YoY in 2023 and 1Q24. 1Q24 revenue decline of packaged meat segment lessened, but that of pork segment accelerated. Product segment OPM of Smithfield varied, with packaged meat segment OPM outperforming that of pork segment. In recent quarters, Smithfield's pork segment revenue was lower than that of Tyson Foods (TSN US), which is one of its major US peers, and operating profit of its pork segment was less than that of Tyson, which is also reflected in the OPM performance. We believe Smithfield needs to engineer a turnaround to boost listing valuation. WH Group mentioned efforts are underway to improve its North American farm portfolio recently. The targeted restructuring efforts would help streamline the pork segment operations and potentially act as a catalyst to increase listing valuation.
豬肉板塊對最近的業績造成了壓力。根據萬洲國際的數據，Smithfield的營業收入分別在2023年和2024年第一季度同比下降了10.1%和8.1%。包裝肉類板塊的營業收入下降趨勢有所改善，而豬肉板塊的下降加速。Smithfield的產品板塊營業利潤率不同，其中包裝肉類板塊的營業利潤率表現優於豬肉板塊。在最近幾個季度中，Smithfield的豬肉板塊營業收入低於其主要美國同行之一泰森食品公司（美國納斯達克上市），而其豬肉板塊的營業利潤也低於泰森的營業利潤，這也反映在OPm表現上。我們認爲，Smithfield需要實現扭虧爲盈，以提高上市估值。萬洲國際最近提到正在努力改善其北美農場組合。有針對性的重組工作將有助於簡化豬肉板塊的運營，並有可能成爲提高上市估值的催化劑。
Maintain BUY; TP at HK$ 6.6. Reiterate BUY on WH Group's improved profitability in 1Q24, projected recovery in growth momentum, and potential enhancement of financial position resulted from the Smithfield listing. Yet, the listing still faces uncertainties. As such, our DCF-derived TP remains unchanged for now. Current TP represents 8.9x/7.8x 24E/25E P/E, or 1.0x/0.9x 24E/25E P/B.
維持買入；目標價6.6港元。重申萬洲國際買入評級的原因是公司在2024年第一季度利潤改善，預計增長勢頭將得到恢復，而Smithfield上市可能將進一步增強公司的財務狀況。但是，上市仍然面臨不確定性。因此，我們基於現金流折現法計算的目標價暫時不變。目標價表示24E/25E市盈率的8.9倍/7.8倍，或24E/25E市淨率的1.0倍/0.9倍。
Risk factors: 1) Macroeconomic risk; 2)) Regulatory/policy risk; 3) Product quality/safety risk; 4) Risk of changing consumer taste; 5) Pork price remains low for an extended period; 6) Foreign exchange risk; 7) Interest rate risk; 8) Fluctuations in EPS and DPS growth; 9) Potential failure of Smithfield listing.
風險因素：1) 宏觀經濟風險；2)) 監管/政策風險；3) 產品質量/安全風險；4) 消費者口味變化風險；5) 豬肉價格長期低迷風險；6) 匯率期貨風險；7) 利率風險；8) 每股收益和股息支付增長波動風險；9) Smithfield上市潛在失敗風險。
譯文內容由第三人軟體翻譯。
