| Valuation method | Value, HK$ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 34.90 | 72608 |
| Intrinsic value (DCF) | 0.26 | 442 |
| Graham-Dodd Method | 0.30 | 525 |
| Graham Formula | 0.80 | 1567 |
Huisheng International Holdings Limited is a vertically integrated pork producer operating primarily in China with additional operations in Japan. Founded in 1983 and headquartered in Changde, China, the company engages in the complete pork value chain from breeding and farming to slaughtering and processing. Huisheng offers a diverse portfolio of pork products including fresh, chilled, and frozen pork, side products, and processed items such as cured pork and sausages. The company also operates ancillary businesses including piglet sales, hog breeding consultancy services, money lending, and pipe system distribution. As a consumer defensive sector company in the packaged foods industry, Huisheng serves the essential protein needs of Asian markets while navigating the cyclical nature of agricultural commodities. The company's vertical integration provides some insulation from supply chain disruptions, though it remains exposed to commodity price fluctuations and disease risks inherent in livestock operations.
Huisheng International presents a high-risk investment proposition with significant challenges. The company reported a substantial net loss of HKD 24.52 million on revenue of HKD 44.28 million for the period, indicating severe operational difficulties. While the company maintains a strong cash position of HKD 397.77 million with minimal debt (HKD 0.101 million), the negative earnings per share of -0.0271 and absence of dividends reflect fundamental business struggles. The low beta of 0.58 suggests relative insulation from market volatility, but this may also indicate limited growth prospects. Investors should be cautious given the company's small market capitalization of HKD 46.14 million and the highly competitive, low-margin nature of the pork industry in China. The company's diversification into non-core businesses like money lending and pipe distribution may indicate attempts to offset poor performance in its primary operations.
Huisheng International operates in an intensely competitive Chinese pork market dominated by large-scale producers with significantly greater economies of scale. The company's competitive positioning is challenged by its relatively small operational scale compared to industry leaders. While vertical integration from breeding to processing provides some cost control advantages, Huisheng lacks the market power, brand recognition, and distribution network of major competitors. The company's operations in both China and Japan present geographic diversification but also complexity in managing cross-border operations. The pork industry faces persistent challenges including price volatility, disease risks (such as African swine fever), and environmental regulations, which disproportionately affect smaller players like Huisheng. The company's venture into non-core businesses such as money lending and pipe distribution suggests either strategic diversification or distraction from its primary operations. With negative profitability and limited scale, Huisheng appears positioned as a niche player in regional markets rather than a significant competitor in the broader Chinese pork industry. The company's minimal debt provides financial flexibility but cannot compensate for fundamental operational challenges in a commodity business where scale is critical to competitiveness.