Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Earlier this month, <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> announced it had submitted a plan to spin-off its Smithfield US and Mexican ops on the NYSE or NASDAQ,</li>
<li>These ops accounted for 54% of WHG's FY23 revenue and 22.4% of the operating profit; compared to 56% and 44.9% respectively in FY22.</li>
<li>We've been here before. A Smithfield spin-off was touted in 4Q23 (in the media). WHG acquired Smithfield for US$4.7bn in 2013, ahead of its 2014 listing. </li>
</ul>


Earlier this month, WH Group (288 HK) announced it had submitted a plan to spin-off its Smithfield US and Mexican ops on the NYSE or NASDAQ,
These ops accounted for 54% of WHG's FY23 revenue and 22.4% of the operating profit; compared to 56% and 44.9% respectively in FY22.
We've been here before. A Smithfield spin-off was touted in 4Q23 (in the media). WHG acquired Smithfield for US$4.7bn in 2013, ahead of its 2014 listing. 


Reservoir Hogs: WH Group (288 HK) Mulls US/Mexican Spin-Off

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> shares had a breakout relative to the MSCI China index and showing good momentum during the low volume days of summer.  
</li>
<li>
<a href="https://www.smartkarma.com/entities/power-assets-holdings-ltd" target="_blank" data-smartkarma-citation="entities:788:1" rel="noopener">POWER ASSETS HOLDINGS (6 HK)</a> has shown a breakout relative to MSCI Hong Kong with a defensive business and 5%+ dividend yield. 
</li>
<li>
<a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH GROUP (288 HK)</a> has also shown a breakout relative to the MSCI Hong Kong after its announcement of the spinoff of Smithfield Foods in the US. 
</li>
</ul>



BYD (1211 HK) shares had a breakout relative to the MSCI China index and showing good momentum during the low volume days of summer.  


POWER ASSETS HOLDINGS (6 HK) has shown a breakout relative to MSCI Hong Kong with a defensive business and 5%+ dividend yield. 


WH GROUP (288 HK) has also shown a breakout relative to the MSCI Hong Kong after its announcement of the spinoff of Smithfield Foods in the US. 



Technically Speaking, Breakouts and Breakdowns: HONG KONG (July 24)

Analyst

Steve Zhou, CFA

Equity Bottom-Up

<ul>
<li>Since my previous insight on <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> in October 2023, the stock is up 17%, massively outperforming the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a>. </li>
<li>The company is still trading at 6x forward PE, compared to an average forward PE of 11x since 2016. </li>
<li>With the US business recovering as well as its potential IPO, and a stable China business, the stock remains a buy with limited downside. </li>
</ul>


Since my previous insight on WH Group (288 HK) in October 2023, the stock is up 17%, massively outperforming the Hang Seng Index (HSI INDEX). 
The company is still trading at 6x forward PE, compared to an average forward PE of 11x since 2016. 
With the US business recovering as well as its potential IPO, and a stable China business, the stock remains a buy with limited downside. 


WH Group (288 HK):  Update On The Bull Case

<ul>
<li>According to public news yesterday, <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> plans to list its US pork business Smithfield Foods, the largest US pork producer, back in the US again. </li>
<li>WH Group currently trades at 5x 2024E PE, assuming earnings return to the 2022 level in 2024E.  Since 2016, the company has had an average PE of 11x. </li>
<li>The stock is a buy with a fairly strong catalyst in the potential US listing of the Smithfield Foods business, while downside is limited. </li>
</ul>


According to public news yesterday, WH Group (288 HK) plans to list its US pork business Smithfield Foods, the largest US pork producer, back in the US again. 
WH Group currently trades at 5x 2024E PE, assuming earnings return to the 2022 level in 2024E.  Since 2016, the company has had an average PE of 11x. 
The stock is a buy with a fairly strong catalyst in the potential US listing of the Smithfield Foods business, while downside is limited. 


WH Group (288 HK):  Potential US Listing Of Smithfield Foods Could Be A Catalyst

Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

<ul>
<li>Earnings for Q3 2023 came in at 17.5 mn HKD up 5% YoY, about 15% below our expectations due to closure costs incurred on some restaurants in November. </li>
<li>The company added four restaurants in December 2022 which should result in strong revenue growth in January 2023. We expect monthly revenue to surpass HKD 80 mn. </li>
<li>Post the recent rally, the stock trades at 8.2x/5.2x FY23e/24e, with a 7.3%/11.5% FY23e/24e dividend yield assuming a 60% payout. We see this as an extremely cheap HK recovery play. </li>
</ul>


Earnings for Q3 2023 came in at 17.5 mn HKD up 5% YoY, about 15% below our expectations due to closure costs incurred on some restaurants in November. 
The company added four restaurants in December 2022 which should result in strong revenue growth in January 2023. We expect monthly revenue to surpass HKD 80 mn. 
Post the recent rally, the stock trades at 8.2x/5.2x FY23e/24e, with a 7.3%/11.5% FY23e/24e dividend yield assuming a 60% payout. We see this as an extremely cheap HK recovery play. 


Taste Gourmet: Encouraging 3Q 2023, Super Set Up for Q4.

Hong Kong

WH Group Limited operates as a holdings company. The Company, through its subsidiaries, provides meat processing services, supplies chilled meat, meat products, and other related products.

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WH Group (288 HK)

Reservoir Hogs: WH Group (288 HK) Mulls US/Mexican Spin-Off

Unless we see a significant (and sustainable) reversal in the US/Mexican ops in the interim results, now hardly appears the opportune time for a...

David Blennerhassett

Technically Speaking, Breakouts and Breakdowns: HONG KONG (July 24)

BYD Company, Power Assets and WH Group all experienced breakouts during the week. WH Group announced a spin off of its Smithfield Foods business...

David Mudd

WH Group (288 HK): Update On The Bull Case

With the US business recovering as well as its potential IPO, and a stable China business, the stock remains a buy with limited downside.

Steve Zhou, CFA

WH Group (288 HK): Potential US Listing Of Smithfield Foods Could Be A Catalyst

WH Group (288 HK) plans to list its US pork business Smithfield Foods back in the US, offering a potential catalyst for the stock which trades at...

Steve Zhou, CFA

Taste Gourmet: Encouraging 3Q 2023, Super Set Up for Q4.

Taste Gourmet trades at 8.2x/5.2x FY23e/24e, with a 7.3%/11.5% FY23e/24e dividend yield assuming a 60% payout. We see this as an extremely cheap HK...

Sameer Taneja

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Reservoir Hogs: WH Group (288 HK) Mulls US/Mexican Spin-Off

Unless we see a significant (and sustainable) reversal in the US/Mexican ops in the interim results, now hardly appears the opportune time for a...

David Blennerhassett

Technically Speaking, Breakouts and Breakdowns: HONG KONG (July 24)

BYD Company, Power Assets and WH Group all experienced breakouts during the week. WH Group announced a spin off of its Smithfield Foods business...

David Mudd

WH Group (288 HK): Update On The Bull Case

With the US business recovering as well as its potential IPO, and a stable China business, the stock remains a buy with limited downside.

Steve Zhou, CFA

WH Group (288 HK): Potential US Listing Of Smithfield Foods Could Be A Catalyst

​WH Group (288 HK) plans to list its US pork business Smithfield Foods back in the US, offering a potential catalyst for the stock which trades at...

Steve Zhou, CFA

Taste Gourmet: Encouraging 3Q 2023, Super Set Up for Q4.

Taste Gourmet trades at 8.2x/5.2x FY23e/24e, with a 7.3%/11.5% FY23e/24e dividend yield assuming a 60% payout. We see this as an extremely cheap HK...

Sameer Taneja

WH Group (288 HK) plans to list its US pork business Smithfield Foods back in the US, offering a potential catalyst for the stock which trades at...