2025-10-13 01:00Summary of WH Group and Shuanghui Conference Call Industry Overview - Industry: China Consumer Staples, specifically focusing on the pork and packaged meat sectors Key Points on WH Group 1. 3Q25 Performance Expectations: WH Group's operating profit (OP) is expected to grow steadily by 2% year-over-year (yoy) in 3Q25, driven by strong packaged meat sales despite a decline in fresh meat profits due to hog price impacts and competition [1][2] 2. China Business Outlook: The China segment is projected to achieve approximately 2% yoy OP growth, with packaged meat unit profit estimated at Rmb5,003/ton, benefiting from declining hog prices [1] 3. 4Q25 Projections: Anticipated OP growth could accelerate to 6% yoy in 4Q25, primarily due to a strong performance in China, expected to grow by 12% yoy, with packaged meat leading at 9% OP growth [2] 4. Profit Adjustments: WH Group's net profits attributable to shareholders have been raised by about 2% for 2025-2027, while Shuanghui's profits were trimmed by 2% due to upstream business challenges [3] 5. Price Target: The 12-month price target for WH Group is set at HK$9.0 per share, down from HK$9.4, maintaining a "Buy" rating [3] Key Points on Shuanghui 1. Performance Expectations: Shuanghui's revenue is projected to decline slightly, with a 2% decrease in operating profit anticipated due to challenges in the upstream business [3][10] 2. Price Target: The 12-month price target for Shuanghui is Rmb24.8, reflecting a neutral outlook based on fair valuation [10][13] 3. Revenue Trends: Shuanghui's revenues from meat products are expected to decrease, with fresh and frozen pork revenues projected to stabilize around Rmb24,813 million in FY2025 [12] Financial Metrics - WH Group Financials: - Revenue for FY2025 is estimated at $28.078 billion, with an underlying EBIT of $2.583 billion [11] - EBITDA is projected to be $3.237 billion for FY2025 [11] - Shuanghui Financials: - Total revenue for FY2025 is expected to be Rmb62,743 million, with operating profit around Rmb6,527 million [12] Risks and Considerations 1. Market Risks: Potential volatility in live hog prices and higher corn prices could pressure margins for both WH Group and Shuanghui [15][16] 2. Competition: Intensity of competition in the packaged meat sector could impact profitability [13][16] 3. Food Safety Issues: Any food safety concerns could negatively affect consumer trust and financial performance [16] Conclusion - WH Group is positioned for steady growth in the packaged meat sector, while Shuanghui faces challenges in its upstream business. Both companies are navigating a competitive landscape with potential risks related to market volatility and food safety.