Q1 Results Signals Strong Turnaround in Profits; Raising FVE to HKD 8.40, Shares Undervalued

WH Group operates a vertically integrated value chain in the hog industry across China, the U.S., and Europe. Through its subsidiaries Shuanghui in China and Smithfield in the U.S., the company engages in hog production, slaughtering, and packaged meat processing and distribution. Shuanghui is a clear market leader in the packaged meat industry in China, commanding around one third of value share. WH Group derives close to 90% of its operating profit from packaged meat across China and the U.S., although Smithfield has a lower market share in processed meat versus Hormel, Tyson, and Pilgrim’s Pride. Profitability of this segment tended to be more stable versus the company’s upstream business.