In This Article:
Investing.com -- Shares of food manufacturing firm Bakkavor Group PLC (LON:BAKK) edged up by 0.6% following the announcement of a binding agreement to sell its China operations to Lihe Xing (Qingdao) Food Technology Co. Ltd, a subsidiary of Lihoo’s (Qingdao) Food Industry Company Ltd.
The sale, expected to close in the second half of 2025, is anticipated to net the company a profit of approximately £15 million, considering the carrying value of the China net assets was £39 million.
The transaction is seen as a strategic move for Bakkavor, as the company’s operating profit forecasts for 2026 are set to increase to 5.7% upon the exclusion of the China segment.
Analysts had previously accounted for approximately 5.5% of the Group’s 2026 revenue to come from China, equating to around £130 million, but this only contributed roughly 0.4% to the Group’s adjusted operating profit.
Analysts at RBC called the deal a positive development for the company, noting that it aligns with expectations.
The move is expected to bring the company closer to its medium-term margin target, indicating a strategic repositioning that could pay off in the coming years.
Related articles
Bakkavor shares edge up on China operations sale deal
Needham bullish on Twilio on upside on AI, free cash flow
TD Cowen downgrades Hims & Hers Health to Hold on GLP-1 headwinds,