Citi: Cuts WH GROUP (00288) Target Price by 17.9% to HK$6.4, Downgrades Rating to "Neutral"

Citi issued a research report stating that it has cut WH GROUP's (00288) net profit forecasts for 2026 to 2028 by 7%-8%, and due to dividend uncertainty, raised the holding company discount from 20% to 30%, cut the target price by 17.9% from HK$7.8 to HK$6.4, and downgraded the rating from "Buy" to "Neutral". WH GROUP's third-quarter operating profit fell 30% year-on-year, in line with the bank's expectations, with performance across all regions weaker as expected. Management lowered its 2026 operating profit guidance for the US, and the fourth-quarter outlook for the US business is worse than the bank's prior view, which was already below market expectations. The weak outlook for US hog prices, combined with a possible rebound in China's hog prices in 2027, are both adverse to the businesses in the two regions. The bank noted that management reiterated its policy of maintaining a moderately high dividend payout, but the specific payout ratio for Shuanghui remains to be determined. The bank agrees with the company's intention to maintain moderately high shareholder returns, but believes that the dividend argument lacks persuasiveness without earnings support.