Citi has released a research report indicating that WH Group (00288) subsidiary Smithfield has further reduced its guidance due to weak demand and declining pork/live hog price trends. Consequently, the firm has cut its net profit forecasts for WH Group for 2026 to 2028 by 10% to 11%, and lowered its North American operating profit estimate by 18%, primarily impacted by the pork business. As a result of the reduced earnings projections and a higher holding company discount, the target price has been trimmed from HK$9.9 to HK$8.2.

The "Buy" rating has been maintained, supported by a dividend yield that remains above 5% even under conservative payout assumptions. The firm has also revised its dividend payout ratio assumption down from 66% to 50%, reflecting uncertainties in cash flow amid operational challenges at WH Group and the absence of an interim dividend from Shuanghui. In its sum-of-the-parts valuation, Citi has increased the holding company discount from 10% to 20%, highlighting uncertainty in the dividend outlook, despite the company reaffirming its intention to maintain stable shareholder returns.

The report anticipates a 15% year-on-year decline in net profit for 2026, with expectations for stabilization in 2027.