Incidents:
On March 29, Great Wall Motor released its 2023 annual report: The company achieved revenue of 173.21 billion yuan, +26.1% year on year, realized net profit of 7.02 billion yuan, and realized net profit of 4.83 billion yuan, +8.0% year on year; 2023Q4 achieved revenue of 53.71 billion yuan, +41.9% year on year, realized net profit of 2.03 billion yuan, +1818.2% year on year, realized net profit without deduction of 1.03 billion yuan year on year, +652.0% year over year.
Opinions:
In 2023, bicycle sales were +8.9% year-on-year, and the sharp rise in volume and price led to revenue growth. In 2023, the company's vehicle business achieved a sharp rise in volume and price, and revenue increased 26.1% year over year. Vehicle sales in 2023 were +15.8% year-on-year to 1.23 million units, with NEV sales +99% to 260,000 units, accounting for 21.3%, up 9 pcts year-on-year. The average price of bicycles was +8.9% to 141,000 yuan/vehicle. Among them, the average price of bicycles in 2023Q4 was 146,000 yuan/vehicle, +2.6%/2.0% year-on-month, mainly due to the increase in sales of high-end brands. The 2023Q4 tank and Wei brand accounted for +0.5pct/2.9pct of year-on-month sales.
Net profit due to exchange rate earnings was under pressure, and the 2023Q4 net profit margin to mother was +3.5pct year-on-year. In 2023, the company's net profit to mother was -15.1% year-on-year. Excluding the impact of exchange rate earnings, net profit not attributable to mother was +7.98%. Among them, 2023Q4 net profit margin was +3.5pct year on year, and profitability increased year on year. The main reasons were scale effect cost reduction, 2023Q4 gross margin +0.5pct to 18.5% year over year; second, cost control optimization, period expense ratio was -1.4pct to 12.98% year over year, of which management cost rate/financial expense ratio was -0.7pct/-1.4pct year on year, sales cost rate/R&D expense ratio +0.6pct/+0.2pct year on year. The main reason was that companies increased sales of R&D of new energy products input.
High-end brands have entered a new product cycle, and overseas sales have continued to increase. Looking ahead to 2024, the company's high-end brands such as Tank and Weipai will enter a new product cycle. Major new vehicles such as the Tank 300Hi4-T, Tank 800, and Wei Brand Latte are expected to be launched in 2024 to contribute to sales growth, promote the transformation of new energy sources, and increase the company's overall profit margin. Overseas sales volume in Q1 2024 was +79% year-on-year, maintaining a high growth rate. With the support of more than 1,000 existing overseas channels, the company's overseas sales are expected to continue to increase as overseas KD factories such as Malaysia and Erdogua are gradually built and put into operation.
Profit forecast and investment rating: The company will enter a new high-end brand product cycle in 2024, and the gradual construction and improvement of overseas channels and production capacity is expected to maintain a high export growth rate. The company's net profit for 2024-2026 is estimated to be 98.8/123.0/14.69 billion yuan, respectively, and the corresponding PE is 20.7/16.7/13.9 times, respectively, covered for the first time, giving it a “buy” rating.
Risk warning: industry competition intensifies; product sales fall short of expectations; geopolitical risks; rising prices of upstream raw materials; measurement errors, subject to reality; third party data statistics risk.