Fitch downgrades Wens Foodstuff

Fitch Ratings said it downgraded Wens Foodstuff Group Co., Ltd.'s long-term foreign-currency issuer default rating, senior unsecured and U.S. dollar note ratings to BB from BB+.

“The downgrade reflects the prolonged industry oversupply, resulting in persistent low hog prices and weakening Wens' medium-term profitability. Hog prices have been below breakeven for most of 2023, which we expect to result in an EBITDA loss for the year. The ratings also reflect the inherent heightened volatility in the pace and degree of a price rebound,” Fitch said in a statement.

Fitch said it forecasts Wens' 2023 total EBITDA will be negative as hog prices retreat to below CNY 16.5/kg, the industry breakeven price, in October after a short rebound in 3Q23. The agency said it does expect hog prices to gradually return to normal starting in the second half of 2024.

The outlook is negative.

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