Performance summary: The company released its 2024Q1 quarterly report. Overall revenue for the first quarter was 42.86 billion yuan, +47.6%/-20.2% year-on-month; net profit to mother was 3.238 billion yuan, +1752.5%/+59.3%, net profit after deducting net profit of 2,024 billion yuan after deducting net profit from the previous year, and +97.3% month-on-month. The net profit performance of 24Q1 to mother exceeded our expectations.
Gross margin showed impressive month-on-month performance, and high profits in overseas markets continued to be realized. 24Q1 achieved wholesale sales of 275,300 units, +25.2%/-24.9% year over month, and continued export explosion drove the company's quarterly sales to a high year-on-year increase; the average price of Q1 bicycles was converted to 155,700 yuan, +17.9%/+6.3% year over month, product structure continued to be optimized, and bicycle revenue led independent brands. By brand structure, the company's share of Weipai/tank sales continued to rise. Q1 was +3.5%/+17.9%, respectively, +1.9/+6.9pct, +1.1/+4.3pct month-on-month, and Haval brand sales accounted for 57.3%. The year-on-month ratio remained stable, and the share of Eulah/pickup truck sales declined. The 24Q1 company achieved a gross profit margin of 20.0%, +4.0/+1.6pct, respectively. The year-on-year increase was mainly due to the company's product scale increase & product structure optimization, leading the domestic profit performance in the overseas market, with Q1 exports of 92,800 units, +78.5%/-11.1%, accounting for 33.7%, +10.1/+5.2 pct. The month-on-month increase in gross margin was mainly due to 23Q4 dealer rebates and year-end bonus accruals. In terms of cost ratios, the 24Q1 sales management and research expenses rates were 4.0%/2.3%/4.6%, respectively, -1.0/-1.3/-0.7pct, and -1.9/-0.7/-0.2pct, respectively. The year-on-year decline was mainly due to a rise in sales volume leading to a decline in average amortization. The absolute value of investment in sales management and research continued to grow steadily. The month-on-month decline mainly boosted the year-end bonus calculation at the end of 23.
The company's 24Q1 net profit of bicycles was 11,700 yuan, and net profit of bicycles returned to mother after deduction was 0.74 million yuan, all significant year-on-year increases, +112.1%/+162.7% month-on-month respectively. Q1 Non-recurring profit and loss of $1,203 million, including $621 million in government grants. The company firmly promotes a long-term strategy, and its global competitiveness is steadily improving.
Outlook: The pace of the company's globalization is accelerating, and there is no way to drive smart in Kaesong to enhance product competitiveness and make rapid progress.
On a global level, facing the global market, the company focuses on the “ONE GWM” brand strategy to accelerate “going overseas”. The global product matrix is becoming richer, and sales of high-end products and new energy products are increasing. Based on the CIS market, which has already gained clear advantages, the company Wei brand, tank, Euler, etc. have continued to break through in the Middle East/Southeast Asia market, and overseas sales have continued to increase in 24 years. On an intelligent level, the Blue Mountain lidar version was released at the Beijing Auto Show, and the company simultaneously developed three sets of low cost/medium cost/high cost smart driving solutions to target L2/L2+/L3 advanced smart driving functions for models with different prices. Continued improvement in product strength drove the company's average price upward, high-end acceleration breakthroughs, and domestic and overseas markets are growing at the same time and improving health.
Profit forecast and investment rating: We maintain Great Wall Motor's 2024-2026 net profit forecast of 89/117/151 billion yuan, corresponding EPS of 1.04/1.37/1.76 yuan/share, respectively, corresponding to PE valuation 22/17/13 times. Maintain Great Wall Motor's “buy” rating.
Risk warning: demand recovery is progressing less than expected; the price war in the passenger car market has exceeded expectations.