The Zhitong Finance App learned that Bank of America Securities released a research report stating that it lowered the target price of Wanzhou International (00288) by 11% from HK$9.6 to HK$8.5, and also lowered the 2026 and 2027 earnings forecasts per share by 8% and 11%, mainly reflecting weak US pig and pork prices, as well as Smithfield's recent further downward guidance, for the second time since August. The bank expects Wanzhou International's operating profit to drop 31% year on year and net profit to drop 38% year on year in the third quarter of 2026, but it expects a normalized dividend rate of more than 5%, and dividends are expected to provide support.
Bank of America Securities predicts that in the third quarter of 2026, Wanzhou International's operating profit in the third quarter of 2026 will drop 14% year on year in RMB and 8% in US dollar terms due to exchange effects; US business operating profit will drop 53% year on year, and European business will drop 33% year on year. Net profit for the period is expected to drop 38% year-on-year, mainly due to Wanzhou International's sale of part of Smithfield's interests on September 8, 2025, the profit portfolio shifting to the Chinese business, high minority shareholders' interests in the Chinese business, and one-time income in the third quarter of 2025.
In terms of the Chinese business, the bank believes that it is mainly affected by the high base of packaged meat and growing losses in pig and chicken farming; the US business is mainly hampered by fresh pork, and packaged meat performance is relatively steady; and the European business continues to weaken due to low pig prices.
In terms of dividends, the bank expects Wanzhou International's regular dividend of HK51 cents per share in 2026, down from HK 61 cents in 2025. The dividend ratio is 60%, and the normalized dividend rate is expected to exceed 5%. However, the bank believes that there is a possibility that dividends will rise because the absolute value of the Group's dividend payout per share has remained stable or rising since 2023, and its Chinese entities, as one of Wanzhou International's dividend funding sources, guide the 2026 dividend payout ratio to be roughly similar to the 2025 fiscal year.