Citi Slashes WH Group Target Price by 17.9% to HK$6.40, Downgrades Rating to Neutral

Citi has released a research report lowering its net profit forecasts for WH Group (00288) for 2026 to 2028 by 7% to 8%.

Due to dividend payout uncertainty, the bank has raised its holding company discount from 20% to 30%, cut its target price from HK$7.80 by 17.9% to HK$6.40, and downgraded the rating from Buy to Neutral.

WH Group's third-quarter operating profit fell 30% year-on-year, in line with the bank's expectations, with performance across all regions coming in weaker as anticipated.

Management has lowered its 2026 operating profit guidance for the United States, and the outlook for the U.S. business in the fourth quarter is worse than the bank's previously below-consensus estimate.

The weak outlook for U.S. hog prices, combined with a possible rebound in China's pig prices in 2027, poses headwinds for both markets.

The bank noted that management has reiterated its commitment to maintaining a moderately high dividend policy, but the specific payout ratio for Shuanghui remains to be determined.

The bank agrees with the company's intention to sustain moderately high shareholder returns, but believes the dividend argument lacks persuasiveness without earnings support.