Goldman Sachs: Lower WH Group (00288) target price to 11.1 Hong Kong dollars, expecting a decline in second quarter operating profit.

Goldman Sachs released a research report stating that based on the performance expectations for the second quarter, they have lowered their net profit forecast for WH Group (00288) for the years 2026 to 2028 by 1% to 2%. The target price has been revised from HKD 11.8 to HKD 11.1, while maintaining a "neutral" rating. The firm predicts that Wan Zhuo's second quarter operating profit will see a high single-digit decline year-on-year, dragging down the overall performance for the first half of the year to roughly flat year-on-year. The forecast for the Chinese business's second quarter operating profit is a drop of 11% year-on-year, while pig production remains soft amid falling pig prices. However, losses have narrowed in the second quarter due to operational improvements compared to the first quarter. In terms of international business, the US packaged meat sector faces rising beef and freight costs, but the pig production commodity price environment still provides support. European pig production business recorded a high double-digit decline due to the high base effect, while packaged meat maintained strong double-digit growth. Looking ahead to the second half of the year, Goldman Sachs believes that the mainland consumer environment remains mixed, but they trust that Wan Zhuo's Chinese business can flexibly control the promotion of packaged meat, and the cost structure of the US business can also be improved. They expect the European pig business to narrow its losses starting from the third quarter as pig prices stabilize.