WH GROUP(00288) 民银证券·2024-11-24 07:02Company Overview - Current stock price of WH Group (0288 HK) is HKD 6 43 with a total market capitalization of HKD 82 5 billion [2] - The stock has a 52-week price range of HKD 6 50 to HKD 4 41 and an average daily trading volume of HKD 172 6 million over the past 3 months [2] Smithfield Spin-off and Valuation Potential - WH Group plans to spin off its US subsidiary Smithfield for an independent listing on a US exchange with an expected issuance of up to 20% of shares [4] - Post-listing WH Group will retain at least 80% ownership in Smithfield which will continue to be fully consolidated in WH Group's financials [4] - Smithfield's minimum valuation is expected to be no less than its net asset value of USD 5 38 billion as of September 30 [4] - WH Group shareholders will receive a dividend in kind equivalent to 0 35% to 0 45% of Smithfield's enlarged issued share capital [4] - Smithfield's revenue and net profit for 2022 2023 were USD 16 2 billion USD 14 6 billion and USD 724 million USD -70 million respectively [5] - For the first 9 months of 2024 Smithfield reported revenue and profit of USD 10 19 billion and USD 61 million respectively with a post-tax loss of USD 10 million [5] - Smithfield's minimum valuation implies a P E ratio of 8x compared to Tyson and Hormel's 14x P E [5] Financial Performance - WH Group's revenue for 2020 2021 2022 2023 and H1 2024 were USD 25 589 million USD 27 293 million USD 28 136 million USD 26 236 million and USD 12 293 million respectively [6] - Net profit attributable to shareholders for the same periods were USD 828 million USD 1 068 million USD 1 370 million USD 629 million and USD 784 million [6] - Net profit margins were 3 2% 3 9% 4 9% 2 4% and 6 4% respectively [6] - P E ratios were 13x 10x 8x 17x and 8x respectively [6] Industry and Market Context - US hog prices have shown a significant year-over-year recovery in 2024 [9] - Soybean meal prices in the first 10 months of 2024 decreased by 28% year-over-year [12] - Corn prices in the first 10 months of 2024 decreased by 16% year-over-year [12] Peer Comparison - WH Group's 2024E revenue and net profit are forecasted at USD 25 7 billion and USD 1 42 billion respectively with a P E of 7x [12] - Shuanghui Development's 2024E revenue and net profit are forecasted at USD 5 89 billion and USD 5 1 billion respectively with a P E of 15x [12] - Tyson Foods' 2024E revenue and net profit are forecasted at USD 53 6 billion and USD 1 22 billion respectively with a P E of 18x [12] - Hormel's 2024E revenue and net profit are forecasted at USD 12 2 billion and USD 930 million respectively with a P E of 18x [12]