Macquarie: Maintaining Wanzhou International's (00288) “Outperform the Market” rating, the target price was raised to HK$9.2

The Zhitong Finance App learned that Macquarie released a research report stating that it maintained Wanzhou International's (00288) “outperforming the market” rating and raised the target price by 4.5% to HK$9.2. The bank predicts strong performance of Wanzhou International in the third quarter. Quarterly operating profit is expected to rise 44% year over year, benefiting from continued recovery in US business and improvements in mainland business.

The bank pointed out that the company's packaging business in the US is still a bright spot. Quarterly profit is expected to rise 30% year-on-year, benefiting from favorable cost and efficiency improvements. Falling feeding costs and tough meat prices should help reverse the US upstream business, compared with a loss of 56 million US dollars in the same quarter last year. The bank predicts that the company's operating profit in the US will increase 1.97 times year-on-year in the third quarter, which is the main driving force for the performance.

According to the report, Wanzhou's mainland business operations faced challenges in the second quarter, and packaged meat sales fell 14.8%. Although consumer demand in the mainland is still weak, the decline is expected to narrow in the third quarter, and growth will be positive in the fourth quarter at a low base. Profits per ton will also remain strong, benefiting from lower feeding costs. The bank's quarterly profit from mainland operations remained flat year over year, which meant that related business bottomed out.