WH Group (0288.HK)

[cyclone]

This Chinese Pork CEO Was Paid More Than Tim Cook or Elon Musk

By Bruce Einhorn
May 16, 2018, 12:00 AM GMT+8

The highest paid executive of a Hong Kong-listed company last year wasn’t a high-flying financier or real-estate tycoon. It was Wan Long, a former factory manager who helped turn a humble state-owned meat processor into the world’s biggest pork producer -- and in doing so built his own fortune.

Compensation for Wan, chairman and chief executive officer of WH Group Ltd., was $291 million in salary and stock payments last year, according to the company’s annual report.

The pork boss topped high-profile American CEOs like Apple Inc.’s Tim Cook, Tesla Inc.’s Elon Musk and Goldman Sachs Group Inc.’s Lloyd Blankfein and was one of the best-paid executives anywhere in the world, according to data compiled by Bloomberg.

WH Group -- through subsidiaries Virginia-based Smithfield Foods and Chinese meat company Henan Shuanghui Investment & Development Co. -- operates hog farms and factories in China, the U.S. and Europe and also sells consumer brands like Farmland bacon and Eckrich sausage.

More details in https://www.bloomberg.com/news/articles/...-blankfein

[cyclone]

World's Largest Pork Producer Becomes Hong Kong's Worst Stock

By Kana Nishizawa  and Jeanny Yu
June 12, 2018, 1:11 PM GMT+8

Analysts can blame the U.S.-China trade spat for turning their favorite pork producer into the worst performer on Hong Kong’s benchmark Hang Seng Index.

WH Group Ltd., the world’s largest pork company, sank 3.6 percent on Tuesday at the midday break in Hong Kong, taking its three-day loss to 11 percent to become the year’s worst performer on the index. With the company getting more than half of its revenue from the U.S., investors are fleeing the stock ahead of a June 15 deadline for announcing the Chinese products that will be subject to 25 percent tariffs.

"The majority of people tend to think the tariffs are really coming," said Linus Yip, strategist at First Shanghai Securities. "The market is looking to reduce risks on related companies. WH Group is among companies with heavy exposure to the U.S."

More details in https://www.bloomberg.com/news/articles/...orst-stock

[cyclone]

Shares of Chinese butchers plunge as reports of African swine fever outbreak spreads in China
The deadly fever that hit northeastern Liaoning province in early August has spread to central China’s Zhengzhou city

Jane Li
PUBLISHED : Thursday, 16 August, 2018, 6:38pm
UPDATED : Thursday, 16 August, 2018, 6:57pm

Shares of “China’s No 1 butcher” WH Group, the world’s largest pork meat processor, plunged as much as 11 per cent on Thursday after news broke that mainland authorities shut down one of its slaughter houses where dead pigs had been infected with African swine fever.

Officials of Zhengzhou city in central China suspended operations and sealed off the slaughter house, which is controlled by WH’s subsidiary Shuanghui Development, for six weeks.

Hong Kong-traded shares of WH Group, which owns US-based Smithfield Foods, began to dive from HK$6.50 at 2pm after a number of mainland Chinese media published reports that 30 pigs transported from northeastern Heilongjiang province to the slaughter house had died from African swine fever. The stock closed 7.5 per cent lower at HK$6.08.

The circulation of the reports also triggered the sharp drop of Shuanghui shares in Shenzhen, which tumbled by their daily 10 per cent limit to close at 22.41 yuan.

A WH spokesman confirmed with the Post that the sealed off slaughter house was controlled by Shuanghui, without giving further details.

More details in https://www.scmp.com/business/china-busi...wine-fever

[BlackCat]

A quick look at this company.  Formerly Shanghui/Shineway, it bought over Smithfields.


In 2017, 50% of their profit was from the US, 43% from China.

China:
  - Shanghui's hog raising operations are small: In 2013 it raised only 2.5% of the pigs it slaughtered (p15).  So profit is affected by live pig prices.
  - China's live pig prices are highly cyclical.  Now at the lowest point in 4 years.  This is unsustainable (1) (2)

US.  Mostly from Smithfield's 2015 10-K:
  - 84% of their operating profit was from packaged meat.
  - I don't know about the US industry for packaged meat.  In the long term, I'm guessing you need scale, distribution and branding.
    They are the #1 player in packaged pork with 18% mkt share; top 3 have 50% (slide 4).  Don't know for packaged meat as a whole.
    Don't know if theres a price cycle.  On the demand side, meat in the US is cheap, I think most processed meat is a staple, like bread.  Should be unaffected by economy.  On the supply side, prices do not vary much (google 'lean hog price chart').
  - Partially integrated production: Half their fresh meat was from internally source live hogs, and a "substantial amount" of packaged meat input was from their fresh meat output.
    Feed makes up more than 65% of the cost of raising a hog.  Cost to raise a hog now ~ $50 (ISU - farrow to finish)


Conclusion.  Not looking any further now:
1) Their China profits are unsustainable, live hog prices must rise as they are below production cost.
2) I don't understand the US packaged meat market.  The competition, cycles and profit drivers. Would appreciate it if any VBs know abt this.