Alpha-Centric ESG Research

Kyle Rudden

<ul>
<li>COP27, the 27th annual United Nations international conference on climate change, starts on 6 November and runs through 18 November – in the Egyptian coastal city of Sharm el-Sheikh.</li>
<li>Whereas climate mitigation and clean energy were the main focus of prior conferences, climate adaptation and sustainable agriculture and food are top priorities for the COP26 Presidency.</li>
<li>Therefore, agriculture and food stocks are poised to be the most impacted on a relative basis by COP27 proceedings and outcomes. This Insight considers the potential "winners and losers."</li>
</ul>


COP27, the 27th annual United Nations international conference on climate change, starts on 6 November and runs through 18 November – in the Egyptian coastal city of Sharm el-Sheikh.
Whereas climate mitigation and clean energy were the main focus of prior conferences, climate adaptation and sustainable agriculture and food are top priorities for the COP26 Presidency.
Therefore, agriculture and food stocks are poised to be the most impacted on a relative basis by COP27 proceedings and outcomes. This Insight considers the potential "winners and losers."


COP27: Agriculture and Food Stocks Likely to Be Most Affected by Conference Talks

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>WH Group has sharply outperformed both global peers and HK/China-listed peers since the last bullish insight pounded the table in mid-March 2022.</li>
<li>Since then, the Pork/Feed ratio has been climbing in China and flat to down in the US, and pork prices in China are particularly robust recently. </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> remains cheap as chips. And despite gains, still Cheapest in Yonks relatively speaking. </li>
</ul>


WH Group has sharply outperformed both global peers and HK/China-listed peers since the last bullish insight pounded the table in mid-March 2022.
Since then, the Pork/Feed ratio has been climbing in China and flat to down in the US, and pork prices in China are particularly robust recently. 

WH Group (288 HK) remains cheap as chips. And despite gains, still Cheapest in Yonks relatively speaking. 


WH Group (288 HK) - Stronger, But Still WAY Cheap to Peers

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

Equity Bottom-Up

<ul>
<li>The relaxing of restrictions by Hong Kong makes <a href="https://www.smartkarma.com/entities/taste-gourmet-group-ltd" target="_blank" data-smartkarma-citation="entities:27339:1" rel="noopener">Taste Gourmet Group Ltd (8371 HK)</a> a great reopening play, trading at 8.8x FY22e and 5.6x FY23e. </li>
<li>Despite a challenging environment, the company has executed well, maintaining net margins north of 7-8%, which are far superior to other listed competitors.</li>
<li>With &gt;60% payout ratios, it trades at a dividend yield of 6.7%/11.4% FY22e/FY23e. Since 29% of the market capitalization is cash, we are confident in the dividend payments. </li>
</ul>


The relaxing of restrictions by Hong Kong makes Taste Gourmet Group Ltd (8371 HK) a great reopening play, trading at 8.8x FY22e and 5.6x FY23e. 
Despite a challenging environment, the company has executed well, maintaining net margins north of 7-8%, which are far superior to other listed competitors.
With &gt;60% payout ratios, it trades at a dividend yield of 6.7%/11.4% FY22e/FY23e. Since 29% of the market capitalization is cash, we are confident in the dividend payments. 


Taste Gourmet: Multibagger Reopening Play

<ul>
<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> is two businesses - a US pork processor and a Chinese one - and both businesses are suffering lower margins than they'd like.</li>
<li>But they are doing better than and are cheaper than peers. And still the stock falls. Today, the stock price hit a 6-year low on dramatic underperformance of peers.</li>
<li>The question is what the proper discount would be for people who question its governance credentials. It's a really big discount now.</li>
</ul>



WH Group (288 HK) is two businesses - a US pork processor and a Chinese one - and both businesses are suffering lower margins than they'd like.
But they are doing better than and are cheaper than peers. And still the stock falls. Today, the stock price hit a 6-year low on dramatic underperformance of peers.
The question is what the proper discount would be for people who question its governance credentials. It's a really big discount now.


WH Group (288 HK) - Now Cheapest in Yonks Outright and Vs Peers

David Blennerhassett

<ul>
<li>The Scheme Document for <a href="https://www.smartkarma.com/entities/cp-pokphand-co-ltd" target="_blank" data-smartkarma-citation="entities:10135:1" rel="noopener">Cp Pokphand (43 HK)</a> (CPP) has been dispatched. The Scheme Meeting will take place on the 15 December. </li>
<li>
<a href="https://www.smartkarma.com/entities/charoen-pokphand-foods-public-company-limited" target="_blank" data-smartkarma-citation="entities:16131:1" rel="noopener">CP FOODS (CPF TB)</a> and <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> with 49.74% and 25% of shares out respectively are offering HK$1.15/share for CPP, a leading agri-food conglomerate in China and Vietnam. </li>
<li>The Independent Financial Adviser (Ballas Capital) considers the Scheme to be fair and reasonable. Assuming the Scheme gets up, payment is the 25 January, on or before.</li>
</ul>


The Scheme Document for Cp Pokphand (43 HK) (CPP) has been dispatched. The Scheme Meeting will take place on the 15 December. 

CP FOODS (CPF TB) and Itochu Corp (8001 JP) with 49.74% and 25% of shares out respectively are offering HK$1.15/share for CPP, a leading agri-food conglomerate in China and Vietnam. 
The Independent Financial Adviser (Ballas Capital) considers the Scheme to be fair and reasonable. Assuming the Scheme gets up, payment is the 25 January, on or before.


C.P. Pokphand (43 HK): Scheme Doc Out. Meeting on 15 December

Hong Kong

China Foods Limited, through its subsidiaries, operates food processing businesses.  The Company processes and refines edible oil and fats, produces confectionery products, wine and beverage as well as flour including wheat and other grain products.  In addition, China Foods Limited trades food products.

Vitasoy International Holdings Limited, through its subsidiaries, manufactures and distributes food and beverages.

Nissin Foods Co., Ltd. operates as an instant food manufacturing company. The Company produces fried, cup, and buck wheat noodles. Nissin Foods markets its products worldwide.

Lam Soon (Hong Kong) Limited, through its subsidiaries, manufactures and distributes a range of food products, including flour, edible oils and vegetable fats. The Company also manufactures and distributes household cleaning products, including dishwashing detergent, laundry powder, fabric softener, and floor cleanser.

China Starch Holdings Limited manufactures cornstarch. The Company also manufactures L-lysine hydrochloride salt and other ancillary corn-refined and corn-base products such as corn slurry, corn germ, corn fiber, corn glutten meal, and agricultural fertilizers.

Four Seas Mercantile Holdings Limited, through its subsidiaries, manufactures and trades snack foods, confectionery, beverages, and frozen food products. The Company also manufactures and sells ham and ham related products.

Vedan International (Holdings) Limited manufactures and sells fermentation-based food additive and biochemical products, cassava starch-based industrial products, specialty chemical products, and beverages.

China Resources Beer (Holdings) Company Limited is an alcoholic beverage retailer.

Global Bio-chem Technology Group Company Limited manufactures corn refined and corn based biochemical products in China.  The Company also researches and develops corn based biochemical products.  The products mainly comprise cornstarch, corn gluten, corn oil, feed, modified starch, corn sweeteners, and amino acids.

Global Bio-Chem Technology Group (809 HK)

DaChan Food Asia Ltd. produces chicken feed and hatches, slaughters, and processes chicken.

China Mengniu Dairy Company Limited, through its subsidiaries, manufactures and distributes quality dairy products in China. The principal products are liquid milk products, ice cream, and other dairy products, such as milk powder. The Company markets its products under its primary MENGNIU core brand.

Want Want China Holdings Limited manufactures and trades rice crackers, snack food, beverages, and packing materials.  The Company also manufactures wheat, flour, and raw materials for the manufacture of snack foods.  Most of the company's production facilities are located in China and Taiwan.

Dali Foods Group Company Ltd. is a snack food and beverage company. The Company is actively expanding its products offering and distributes its products through retailers.

Ingredion Incorporated refines corn and produces sweeteners and starches.  The Company has customers in a wide range of industries, including the food, soft drink, brewing, pharmaceutical, corrugating, paper, and textile industries.  Ingredion has Company-owned operations, joint ventures, alliances, and technical licenses in countries around the world.

Pilgrim's Pride Corporation produces prepared and fresh chicken products in the United States and Mexico.  Through vertical integration, the Company controls the breeding, hatching, and growing of chickens and the processing, preparation, and packaging of its product lines.  Pilgrim's Pride exports its products to Canada, Eastern Europe, the Far East, and other world markets.

Nestle (Malaysia) Berhad is an investment holding company.  The Company, through its subsidiaries, markets and sells powdered milk and drinks, liquid milk and juices, instant coffee, and instant noodles. Nestle also manufactures and provides packaging for culinary and chocolate-based food products and trades flavoring ingredients.

NISSIN FOODS HOLDINGS CO.,LTD. produces instant noodle and processed food products.  The Company also develops pharmaceuticals.  NISSIN FOODS operates production facilities in overseas countries including Hong Kong, India, U.S., Singapore, and other countries.

Ruchi Soya Industries Limited manufactures soybean oil, vanaspati vegetable fat, texturized soya protein, soya flour and other soya products.  The Group has also developed Palm stearin and Palm olein cooking oils.

Tingyi (Cayman Islands) Holding Corporation, through its subsidiaries, manufactures and sells instant noodles, baked goods, and beverages in China.

Post Holdings Inc. is a food company. The Company manufactures, distributes, and markets a wide range of ready-to-eat cereal products.

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)

COP27: Agriculture and Food Stocks Likely to Be Most Affected by Conference Talks

COP27 starts next week, and sustainable agriculture/food is at the top of the agenda. That could mean agriculture stocks are the most impacted by...

Kyle Rudden

WH Group (288 HK) - Stronger, But Still WAY Cheap to Peers

WH Group is up strongly the past 3 months, outperforming western peers (+43%) and China/HK-listed peers (+17%). China pork price dynamics are...

Travis Lundy

Taste Gourmet: Multibagger Reopening Play

The relaxing of restrictions by Hong Kong makes Taste Gourmet Group Ltd (8371 HK) a great reopening play, trading at 8.8x FY22e/5.6x FY23e PE and a...

Sameer Taneja

WH Group (288 HK) - Now Cheapest in Yonks Outright and Vs Peers

WH Group has always been cheap to its peer group. Now it is worse. Pork prices are underperforming feed prices, lowering margins worldwide. WH has...

Travis Lundy

C.P. Pokphand (43 HK): Scheme Doc Out. Meeting on 15 December

This still looks a pretty clean deal. I'd be paying up to and around $1.12/share which is ~3.6%/15% gross/annualised spread.

David Blennerhassett

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