Profits increased in 24Q1. A number of new cars will soon be unveiled at the auto show, maintaining “buy” ratings for A shares and H shares
In 24Q1, the company's revenue was 42.9 billion yuan, +48% year-on-year; net profit to mother was 3.2 billion yuan, reversing the year-on-year loss. We look forward to the launch cycle of new vehicles such as the Q2 tank 300Hi4-T. The estimated revenue for 24-26 is 2360/2711/297.5 billion yuan, respectively, and net profit to mother is 88/107/118 billion yuan, respectively. Using the historical valuation method, Great Wall Motor A shares have an average valuation of 34 times in the past 5 years (excluding April '20 to April '21), giving A shares 32 times PE over 24 years, keeping the target price unchanged at 32.96 yuan, and maintaining a “buy” rating.
Great Wall Motor's H shares have an average valuation of 14 times in the past 5 years (excluding April '20 to April '21), giving H shares 13 times PE over 24 years, keeping the target price unchanged at HK$14.77 and maintaining a “buy” rating.
The 24Q1 product structure continued to be optimized, and sales of new energy and overseas sales continued to increase. 24Q1 sold 280,000 vehicles, +25% over the same period last year. Among them, Haval/Weipai/Eulah/tank/pickup sold 15.8/1.0/1.5/4.9/43,000 vehicles, +26%/+182%/-15%/+103%/-11% compared to the same period last year. 24Q1 sold 59,000 new energy vehicles, +113% year-on-year. Overseas sales volume was 93,000 units, +79% year over year. 24Q1's gross profit margin was 20.0%, +4.0pct year-on-year, mainly due to the optimization of the company's product structure and export sales growth. On the cost side, 24Q1 sales expenses, R&D expenses, and management expenses were 17.1/19.6/1.0 billion yuan, respectively, +17%/+28%/-6% year-on-year. The company has advanced a lot in hybrid, pure electricity, hydrogen energy, etc., to increase R&D investment in smart cabins and smart driving.
Accelerate “ecological going overseas”. Many major new products will soon be unveiled on the export side at the Beijing Auto Show. The company is focusing on the “ONE GWM” brand strategy to speed up overseas. Since this year, Weipai Takayama has entered the Dubai market, tank SUVs have been intensively marketed worldwide, and Ola Good Cat has achieved localized production in Thailand. Looking ahead to the Beijing Auto Show, the company will debut with more than 20 blockbuster models. Star products such as the next generation Haval H6, the new generation Haval H9, the Weipai Blue Mountain Smart Driving Edition, the 2024 Euler Good Cat, the Euler Lightning Cat Night Edition, and the Mountain and Sea Cannon Hi4-T will soon be launched together. Among them, the Weipai Blue Mountain Advanced Smart Driving Edition will debut, and the smart cockpit+smart driving system will be fully evolved, and the company's level of intelligence will reach a new level; the next-generation Haval H6 will be unveiled, and the four dimensions of design, power, intelligence, and comfort will be newly evolved; and the Great Wall Cannon 2.4T will launch pre-sale models of the 2.4T passenger gun and 2.4T commercial cannon.
The company placed equal emphasis on “direct sales+dealer sales”. The company focused on the user car purchase experience launched a “double sales” innovation model, that is, a channel network with equal emphasis on “direct sales+dealer sales”, and officially released the “Great Wall Smart Choice” direct sales system. The “double sales” model can better understand users' car needs, enhance the user's car purchase experience, and continuously optimize product iterations based on user feedback. The company's official WeChat platform revealed that from May 1, Great Wall will open 33 “Great Wall Smart Choice” direct sales stores in 17 cities across the country. The stores are located in the core business district; it will recruit and train a team of over 600 high-quality young product experts to provide users with personalized and professional car purchase advice. The “Great Wall Smart Choice” will be the first to launch a variety of flagship models, mainly including the Wei brand, which is positioned as a high-end smart new energy source, and a tank SUV positioned as a high-end luxury off-road.
Risk warning: Demand falls short of expectations, supply chain shortages, the company's new energy transformation is less than expected, etc.