Goldman Sachs on China Pork Sector: Continued Hog Tailwind in China, Strong US Outlook, Buy WH Group
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Following the 4Q25 earnings release, Goldman Sachs maintains a Buy rating on WH Group with a 12-month target price of HK$10.4, raised from HK$9.8. Operating profit grew 9% year-over-year, roughly in line with estimates, while the company declared a robust dividend implying an attractive yield exceeding 6%—the highest among covered Chinese consumer staples.
In China, management anticipates average hog prices will decline approximately 10% in 2026, with weakness concentrated in the first half. However, this headwind should be offset by packaging meat strategies prioritizing volume growth and fresh pork operations shifting toward scale-driven profitability. Although the Chinese hog farming segment will likely remain unprofitable, production costs are expected to drop significantly, narrowing net losses year-over-year.
The US outlook remains exceptionally strong. Management guided 2026 operating profit for US packaged meat at US$1.1-1.2 billion, alongside US$150-200 million for US hog farming. By utilizing hedging strategies to lock in feed costs, the American operations effectively minimize earnings volatility. Meanwhile, the European business continues focusing on high-margin, ready-to-eat convenience foods. Goldman Sachs lifted its 2026 and 2027 core net profit forecasts for WH Group by 9.7% and 4.6% respectively, citing powerful US momentum and adequate cost buffers in China. For Shuanghui Development, the target price was modestly increased to RMB 26.9, maintaining a Neutral stance.