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MarketScreener Homepage  >  Equities  >  SHENZHEN STOCK EXCHANGE  >  Henan Shuanghui Investment & Development    000895   CNE000000XM3

HENAN SHUANGHUI INVESTMENT & DEVELOPMENT

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Henan Shuanghui Investment & Development : China pork producer WH Group's quarterly profit falls 7 percent

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03/15/2019 | 07:45am EDT
Workers sort cuts of fresh pork in a processing plant of pork producer WH Group in Zhengzhou

BEIJING (Reuters) - China's WH Group said on Friday its fourth-quarter net profit fell 7 percent to $290 million, as low pig prices in China and the Sino-U.S. trade war hit the income of the world's top pork producer.

The decline, based on a comparison of nine-month and full-year numbers released on Friday, underlined challenges faced by pork producers around the world.

Net profit for 2018 came to $1.05 billion, WH Group said, down 4 percent from the previous year. Revenue rose 1 percent in 2018 to $22.61 billion, it said in a statement.

WH Group, which owns U.S.-based Smithfield Foods Inc, said average pork prices in the United States dropped 9 percent in 2018 due to higher supplies from an expanding slaughter sector.

Also, the China-U.S. trade war has hit pork shipments between the two countries. In April, China slapped a 25-percent import duty on most U.S. pork products in response to U.S. tariffs on Chinese steel and aluminium products.

Pork products were also included in a second round of tariffs of 25 percent introduced in July.

Speaking to reporters, WH Group chairman Wan Long said the group's pork shipments from Smithfield Foods to Shuanghui, its Chinese business, tumbled 45 percent last year due to the trade dispute.

Weak exports and expansion of output in the United States pushed down pig and pork prices, and hurt company profit, Wan added.

Lower pork prices in China due to an outbreak of severe African swine fever disease also hurt the competitiveness of U.S. exports, WH Group said.

China is battling a fast-spreading epidemic of African swine fever. The disease has now spread to 28 provinces and regions since the first outbreak in August last year.

Pig prices in major production regions fell sharply late last year after a government ban on live hog transport restricted trade and caused oversupply.

But prices have started to recover in the past weeks, in early signs that the deadly African swine fever has slashed production in the world's largest pig herd.

The Ministry of Agriculture and Rural Affairs said on Friday that China's pig herd shrank 16.6 percent in February from the previous year due to the disease.

China made its biggest purchases of U.S. pork in nearly two years last week, U.S. Department of Agriculture data showed on Thursday, as Chinese hog prices surged higher.

Live hog prices in China hit a 14-month high this week.

Pig prices in China are set to rise significantly in the second half of the year and next year, Ma Xiangjie, President of Shuanghui, told analysts.

Hong Kong-listed shares of WH Group are up more than 30 percent since the start of the year as the market expects higher pork prices in 2019 on reduced supplies. The stock closed up 4.56 percent at HK$7.8 ($0.99) per share on Friday.

WH Group will keep expanding its slaughtering capacity, the company added.

It will also increase U.S. exports to China if the Sino-U.S. trade issues can be resolved, Wan told reporters.

($1 = 7.8495 Hong Kong dollars)

(Reporting by Hallie Gu and Dominique Patton; Additional Reporting by Forina Fu and Shellin Li in HONGKONG; Editing by Tom Hogue and Mark Potter)

By Hallie Gu and Dominique Patton

Stocks mentioned in the article
ChangeLast1st jan.
HENAN SHUANGHUI INVESTMENT & DEVELOPMENT End-of-day quote.
WH GROUP LTD -0.68% 7.3 End-of-day quote.20.26%
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Financials (CNY)
Sales 2019 53 917 M
EBIT 2019 6 526 M
Net income 2019 5 172 M
Finance 2019 4 119 M
Yield 2019 5,74%
P/E ratio 2019 15,87
P/E ratio 2020 14,98
EV / Sales 2019 1,43x
EV / Sales 2020 1,29x
Capitalization 81 334 M
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 18
Average target price 27,6  CNY
Spread / Average Target 12%
EPS Revisions
Managers
NameTitle
Xiang Jie Ma President
Long Wan Chairman
Yun Gong Hu Chairman-Supervisory Board
Song Tao Liu Chief Financial Officer & Executive Vice President
Mu You Director & Vice President
Sector and Competitors
1st jan.Capitalization (M$)
HENAN SHUANGHUI INVESTMENT & DEVELOPMENT11 770
TYSON FOODS52.17%29 809
HORMEL FOODS-8.32%20 961
JBS SA92.15%15 036
WH GROUP LTD20.26%13 679
PILGRIM'S PRIDE CORPORATION80.40%6 979