WH Group Ltd
HKEX:288
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Intrinsic Value
The intrinsic value of one WH Group Ltd stock under the Base Case scenario is 10.25 HKD. Compared to the current market price of 6.27 HKD, WH Group Ltd is Undervalued by 39%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
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WH Group Ltd
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Fundamental Analysis
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WH Group Ltd. is a global leader in the pork industry, firmly establishing itself as a significant player in the meat supply chain. Founded in 2014 through the strategic acquisition of Smithfield Foods, the largest pork producer in the United States, WH Group operates across multiple continents, including North America, Europe, and Asia. The company prides itself on its commitment to sustainability and quality, ensuring that their meat products not only meet high culinary standards but also adhere to ethical farming practices. With its diverse portfolio featuring brands like Smithfield, Armour, and Farmland, WH Group is well-positioned to capitalize on growing global protein demand, particul...
WH Group Ltd. is a global leader in the pork industry, firmly establishing itself as a significant player in the meat supply chain. Founded in 2014 through the strategic acquisition of Smithfield Foods, the largest pork producer in the United States, WH Group operates across multiple continents, including North America, Europe, and Asia. The company prides itself on its commitment to sustainability and quality, ensuring that their meat products not only meet high culinary standards but also adhere to ethical farming practices. With its diverse portfolio featuring brands like Smithfield, Armour, and Farmland, WH Group is well-positioned to capitalize on growing global protein demand, particularly in emerging markets where meat consumption is on the rise.
Investors will find WH Group's strong financial fundamentals appealing, with consistent revenue growth driven by strategic expansions and operational efficiency. The company benefits from a vertically integrated supply chain, which enhances cost control and product quality while reducing risks associated with market volatility. Furthermore, WH Group’s rigorous focus on innovation, including advancements in animal husbandry and processing technology, places it at the forefront of the industry. As global dietary trends lean towards protein-rich diets, WH Group's ability to adapt and respond to consumer preferences provides a promising outlook for future profitability, making it a compelling option for investors seeking exposure to the agricultural sector and sustainable food production.
WH Group Ltd. is a global leader in the food industry, primarily focused on the production and distribution of pork products. As of my last knowledge update, the company's core business segments can be outlined as follows:
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Pork Production and Processing:
- This segment involves the breeding, raising, and processing of pigs. WH Group operates large-scale hog farms and processing plants, primarily in the United States and China. The company is one of the largest pork producers globally, leveraging economies of scale to maintain competitiveness.
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Processed Meat Products:
- WH Group produces a variety of processed meat products, including sausages, bacon, and other value-added products. This segment is focused on both retail and food service customers, delivering products that cater to different consumer preferences.
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International Business:
- The international segment encompasses WH Group’s operations outside of its home market. This includes exporting pork products and processed meats to various global markets. The company has been expanding its footprint in regions like Europe and Asia to diversify its market presence and reduce reliance on any single market.
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Supply Chain Management:
- WH Group is also involved in the supply chain management of its products, ensuring the efficient and effective delivery of raw materials and finished goods. This segment contributes to the company’s overall strategy of maintaining quality and reducing costs throughout its operations.
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Retail and Wholesale Distribution:
- The company is engaged in the retail and wholesale distribution of its products, often collaborating with various retail chains, grocery stores, and food service establishments. This distribution network is essential for reaching consumers and building brand recognition.
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Research and Development:
- WH Group invests in R&D to improve product quality, develop new food products, and enhance production processes. This segment is crucial for innovation, helping the company stay competitive in a rapidly evolving food industry.
These segments reflect WH Group’s strategic focus on integrating operations from production to distribution, ensuring quality and efficiency in delivering pork-related products to customers around the world. Please verify with the latest data for any updates or changes in the company’s business structure or strategy.
WH Group Ltd, being one of the largest pork producers in the world, has several unique competitive advantages over its rivals:
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Vertical Integration: WH Group operates a highly integrated supply chain that includes breeding, feeding, and processing. This integration helps in controlling costs, improving efficiency, and ensuring product quality.
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Global Presence: With significant operations in both the U.S. (through Smithfield Foods) and China, WH Group benefits from diversified market exposure. This allows the company to leverage demand in various regions and mitigate risks associated with economic fluctuations in any single market.
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Brand Recognition: The company owns strong brand names, especially in the U.S. market (like Smithfield), which have high consumer loyalty. These brands help in distinguishing its products in a crowded market.
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Economies of Scale: As one of the largest pork producers, WH Group can achieve lower costs per unit through economies of scale. This can provide a pricing advantage over smaller competitors.
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Research & Development: WH Group invests in R&D to improve breeding, feed efficiency, and disease control. This focus on innovation helps enhance productivity and maintain high standards of animal welfare.
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Regulatory Compliance and Standards: The company is known for adhering to strict food safety and quality standards, which is essential in maintaining consumer trust and mitigating regulatory risks. This focus can be a significant competitive differentiator in operating markets with rigid food safety regulations.
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Sustainability Initiatives: WH Group is actively working on sustainability measures, such as reducing greenhouse gas emissions and improving water usage efficiency. These initiatives can enhance its brand image and appeal to environmentally conscious consumers.
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Strong Distribution Network: A well-established distribution network allows WH Group to efficiently manage logistics and ensure product availability, contributing to customer satisfaction and loyalty.
By leveraging these competitive advantages, WH Group can maintain its market position and navigate competitive pressures effectively. These factors contribute to its ability to deliver consistent financial performance over time.
WH Group Ltd, which is primarily involved in the meat processing industry, faces several risks and challenges that could impact its operations and financial performance in the near future:
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Market Volatility: Fluctuations in demand for meat, changes in consumer preferences, and competition from alternative protein sources (like plant-based meats) can significantly affect sales.
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Regulatory Risks: The food industry is subject to extensive regulations related to food safety, animal welfare, environmental standards, and labor practices. Stricter regulations, or changes in enforcement, could increase compliance costs.
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Supply Chain Disruptions: The company's reliance on a global supply chain makes it vulnerable to disruptions caused by geopolitical tensions, natural disasters, or pandemics, which could impact production and distribution.
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Commodity Price Fluctuations: Variability in the prices of raw materials such as feed, livestock, and energy can impact profit margins, especially if the company cannot pass on these costs to consumers.
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Health Trends: Growing health consciousness among consumers may lead to reduced meat consumption, especially processed meats. Wholesome and organic products are becoming increasingly popular and could impact traditional meat sales.
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Trade Policies and Tariffs: As an international player, WH Group is affected by changes in trade policies and tariffs, which can influence market access and costs in key markets.
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Sustainability Concerns: Increasing awareness around sustainability and animal rights has led to greater scrutiny of the meat industry. WH Group may face pressure to adapt its practices, which could involve substantial investment.
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Technological Disruption: Advances in food technology, including the development of lab-grown meat and plant-based alternatives, could disrupt traditional meat markets.
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Currency Exchange Risks: As a global company operating in multiple currencies, WH Group is exposed to fluctuations in foreign exchange rates, which could affect profitability.
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Labor Issues: The industry often faces challenges related to labor availability, recruitment, and wage inflation, which could affect operations.
These challenges necessitate strategic planning and agile responses to mitigate risks and maximize opportunities in a rapidly changing market environment.
Revenue & Expenses Breakdown
WH Group Ltd
Balance Sheet Decomposition
WH Group Ltd
Current Assets | 7.1B |
Cash & Short-Term Investments | 1.4B |
Receivables | 921m |
Other Current Assets | 4.7B |
Non-Current Assets | 11.9B |
Long-Term Investments | 223m |
PP&E | 7.4B |
Intangibles | 3.8B |
Other Non-Current Assets | 408m |
Current Liabilities | 4B |
Accounts Payable | 928m |
Accrued Liabilities | 1.7B |
Short-Term Debt | 27m |
Other Current Liabilities | 1.4B |
Non-Current Liabilities | 4.8B |
Long-Term Debt | 2.5B |
Other Non-Current Liabilities | 2.3B |
Earnings Waterfall
WH Group Ltd
Revenue
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25.4B
USD
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Cost of Revenue
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-20.4B
USD
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Gross Profit
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5B
USD
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Operating Expenses
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-3.1B
USD
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Operating Income
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2B
USD
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Other Expenses
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-969m
USD
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Net Income
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993m
USD
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Free Cash Flow Analysis
WH Group Ltd
USD | |
Free Cash Flow | USD |
During the first nine months of 2024, WH Group saw a remarkable 90% increase in profit attributable to owners, reaching $1 billion. Despite a 3.2% revenue decline to $18.8 billion, the packaged meats segment remains strong, contributing 52.5% of revenue. Operating profit in North America surged 589% to $841 million, buoyed by hog price rebounds and cost controls. Looking ahead, the fourth quarter is expected to show a significant year-over-year increase in packaged meats volume in China, though profit per metric ton may dip from a strong Q3 but remain higher than last year. The company anticipates single-digit volume growth for 2025.
What is Earnings Call?
Profitability Score
Profitability Due Diligence
WH Group Ltd's profitability score is 50/100. The higher the profitability score, the more profitable the company is.
Score
WH Group Ltd's profitability score is 50/100. The higher the profitability score, the more profitable the company is.
Solvency Score
Solvency Due Diligence
WH Group Ltd's solvency score is 71/100. The higher the solvency score, the more solvent the company is.
Score
WH Group Ltd's solvency score is 71/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
Price Targets Summary
WH Group Ltd
According to Wall Street analysts, the average 1-year price target for WH Group Ltd is 7.72 HKD with a low forecast of 6.06 HKD and a high forecast of 15.57 HKD.
Dividends
Current shareholder yield for WH Group Ltd is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Profile
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Industry
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Dividend Yield
Description
WH Group Ltd. is an investment holding company, which engages in the production and sale of packaged meats, fresh pork and hog products. The company employs 107,000 full-time employees The company went IPO on 2014-08-05. The firm operates its businesses through four segments. Packaged Meats segment is engaged in the production, wholesales and retailing of low temperature and high temperature meat products. Fresh Pork segment is engaged in the production, wholesales and retailing of fresh and frozen meat. Hog Production segment is engaged in hog farming. Others segment is engaged in the slaughtering and sales of poultry and the provision of ancillary products and services, such as the provision of logistics services, as well as the sales of flavoring ingredients, packaging materials and imported meat products, among others.
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The intrinsic value of one WH Group Ltd stock under the Base Case scenario is 10.25 HKD.
Compared to the current market price of 6.27 HKD, WH Group Ltd is Undervalued by 39%.