Bank of China International: Maintains "Outperform" rating for WH Group (00288), with target price reduced to 7.2 Hong Kong dollars.

CICC International released a research report, maintaining a rating of "outperform" for WH Group (00288) while lowering its profit forecast for the next two years by 5% and 3% respectively. The target price has also been reduced from 7.5 Hong Kong dollars to 7.2 Hong Kong dollars. The upstream production cuts at Smithfield in the United States are in line with expectations, and the recommendation to split Smithfield is becoming clearer, with the target of increasing dividends per share in the coming years. The bank stated that it has revised its operating profit margin forecast for the company's U.S. fourth quarter from 7.9% to 8.1%. Additionally, weak demand in China is putting pressure on the pork market. Pig prices from October to November fell by 7.7% compared to the third quarter, which was worse than expected, and it is predicted to continue to decrease until the third quarter of 2025. The decline in pig prices will erode the operating profit margins of the pork sector. The bank has lowered its forecast for the operating profit margin of the company's pork business in mainland China for the fourth quarter of 2024 from 10.3% to 9%.