WH Group Earnings: Stabilizing Fresh Pork Segment Drove Profit Beat; Raise Fair Value Estimate by 4%

Narrow-moat WH Group’s 2024 operating profit of USD 2.4 billion was 5% above our estimate, mainly driven by the fresh pork segment as the price spread between pork and hog prices turned more favorable in the US. The packaged meat segment's operating profit also modestly exceeded our forecast, thanks to favorable raw material costs in China and improved efficiency in the US. We raise our 2025-26 operating profit forecasts by 4%-5% to account for a better fresh pork segment profit outlook, but we leave our longer-term forecasts broadly unchanged. We lift our fair value estimate by 4% to HKD 7.20 per share, which implies 2025 price/earnings of 11 times and enterprise value/EBITDA of 5 times. We see shares as fairly valued currently, while a 2025 dividend yield of 5% is decent.