Goldman Sachs: China Consumer Staples — Pork 2Q26 Preview: Earnings Headwinds and Elevated Overseas Costs
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Goldman Sachs previews WH Group's second-quarter 2026 results, projecting operating profit to decline by a high-single-digit percentage year-on-year, leaving first-half profit roughly flat. The China division, including Shuanghui, is expected to see operating profit fall 11%, as packaged meat unit profit drops 13% to drive 2% volume growth. Hog production losses narrowed from the first quarter but remain pressured by declining hog prices.
Internationally, the US business faces rising beef and packaged meat freight and diesel costs, though hog production benefits from a favorable commodity backdrop. European operations are projected to post a high-teens percentage decline in operating profit due to a high base, although packaged meat continues to deliver double-digit growth.
Looking into the second half, Goldman highlights several levers: management can flexibly adjust China packaged meat promotions, US cost structures should improve, and European losses should narrow from the third quarter as hog prices stabilize. Full-year operating profit is expected to remain roughly stable year-on-year, supported by a 7% dividend yield.
Goldman lowered WH Group's 2026-2028 net profit forecasts by 1-2%, primarily reflecting second-quarter softness, and cut the target price from HK$11.8 to HK$11.1 on an unchanged SOTP basis. Shuanghui's 2026-2028 net profit estimates were reduced by 9-10%, with the twelve-month target price trimmed from Rmb27.0 to Rmb25.0 while maintaining a 17x 2026 P/E multiple and a Neutral rating.
Key risks include hog price volatility, cost surprises, and shifts in consumer demand.
Key exhibits
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