Daiwa published a research report indicating that Great Wall Motor was affected by price cuts, and the net profit margin for the second quarter fell to 3%. Disappointing, WEY brand car sales may not be able to offset further price cuts. Daiwa downgraded Changqi's investment rating from “holding” to “selling”, and the target price was lowered from HK$8.5 to HK$8.

The bank said that Changqi's net profit margin was 8.4% in the first quarter, 12.2% in the second quarter of last year, and only 3% in the second quarter of this year, mainly due to sales discounts offered during the period. Changqi's sales in the first half of the year increased by about 2% year-on-year, which is far from the target of 15% growth for the whole year. Since Changqi hopes to maintain its share of the SUV market, it is believed that it will still offer discounts in the second half of the year, leading to a further decline in gross profit.

The report predicts that Changqi's revenue for the second half of the year will rise 17% year-on-year. Of this, 16% will come from an increase in sales volume and 1% will come from an increase in average sales prices. However, due to the high base for the second half of last year, it is expected that the company may sacrifice its net profit margin to achieve the sales growth target, and the net profit margin is expected to drop by 2 percentage points.

Daiwa also lowered its profit margin forecast for the fiscal year 2017 to 2019 by 13 to 22% per share to reflect the impact of the revised sales growth forecast. Due to the pressure on net profit margin due to continued price reductions expected, the bank lowered its net profit margin forecast for the third year, from 7.7% to 8.8% to 7.3% to 7.5%.