CCB International has slightly raised its target price for WH GROUP (00288) by 2.2% from HK$9 to HK$9.2, maintaining an "Outperform" rating. The upward revision is based on the company's effective expansion of sales channels in the Chinese market, leading to a more optimistic revenue outlook. The bank has increased its core profit forecasts for fiscal years 2025 and 2026 by 2.4%. However, due to fluctuations in raw material costs, the bank maintains a conservative assumption regarding the company's operating margin.

The report reiterates that WH GROUP's strong execution capabilities in its integrated business model will support long-term growth, while an attractive dividend yield of around 7% further underpins its valuation. The company delivered robust Q3 2025 results, with revenue rising 7.9% year-on-year and operating profit growing 1.8%. The strong sales performance was driven by: 1) a 10.2% increase in pork sales, attributed to expanded distribution channels in China; and 2) steady 5.1% revenue growth in packaged meat products, benefiting from price increases in the U.S. and European markets.

However, the consolidated operating margin contracted by 0.6 percentage points, primarily due to: 1) rising raw material costs in the U.S.; 2) a shift toward higher-value-for-money products in China's packaged meat segment to better meet consumer demand; and 3) declining hog prices in Europe, which weighed on upstream profitability.

CCB International highlights the expansion of sales channels in China as a key driver. It forecasts Q4 revenue growth of 5.8% but expects a slight 0.2 percentage point decline in operating margin to 8.4%, citing: 1) accelerated marketing efforts and a greater focus on cost-effective products in China; and 2) higher costs in the U.S. market. Nevertheless, the bank anticipates a gradual improvement in operating margins by fiscal 2026, supported by sales leverage.