Key points of investment:
On April 24, 2024, the company released its 2024 quarterly report. 2024Q1 achieved total sales of 275,300 vehicles, +25.1% year over year, of which Haval, Wei, Tank, Euler, and Pickup achieved sales of 15.79, 0.96, 4.92, 1.50, and 43,500 vehicles respectively; achieved total revenue of 42.86 billion yuan, an increase of 47.6% year on year, and bicycle revenue of 155,600 yuan, up 18.0% year on year; net profit to mother was 3.23 billion yuan, up 1752.6% year on year, corresponding to net profit from bicycles to mother 11,700 yuan, up 1382.8% year on year; net profit after deducting non-return to mother was 2.02 billion yuan, compared to -217 billion yuan in the same period last year.
Net profit without return to mother grew rapidly, and the share of sales from overseas and tank brands increased. 2024Q1 sales increased 25.1% year over year and decreased 24.9% month over month, but we need to pay attention to the potential opportunities brought about by structural improvements to exceed expectations. The 2024Q1 sold 92,800 units overseas, accounting for 33.7% of total sales, +10.1pct year on year, and was priced higher than the domestic price war, and was more profitable; tank brands sold 492,000 units, accounting for 17.9% of total sales, +6.9pct year on year, +2.1pct month-on-month. The first quarter was a low sales season, and tank sales declined less from month to month. Overall sales for the first quarter were in line with expectations, but the further increase in overseas sales and the share of tank brand sales led to a significant year-on-year improvement in first-quarter results.
Profit growth of 1.2 billion was not enhanced. The 1.2 billion yuan is mainly comprised of Russian scrap tax refunds, government subsidies, and VAT credits. Among them, the scrap tax refund portion, since Great Wall Motor's Russian Tula plant covers the four major production processes of stamping, welding, painting, and assembly, is exempt from vehicle scrap tax and can be sustainable for a long time.
Sales model reform is expected to boost domestic sales. The company launched an innovative “double sales” model, placed equal emphasis on “direct sales+dealer sales”, and officially released its “Great Wall Smart Choice” direct sales system. Starting May 1, Great Wall Motor will open 33 “Great Wall Smart Choice” direct sales stores in 17 cities across the country, all set up in high-traffic shopping malls in the core business district; it has recruited and trained a team of more than 600 high-quality young products to provide users with personalized car purchase advice and other services. This is an innovation of Great Wall Motor in the marketing chain and is expected to empower Great Wall Motor's domestic sales.
Investment analysis opinion: As a traditional autonomous vehicle enterprise, the company's process, technical ability and supply chain control ability have always been its strengths. Increased model value has catalyzed a rapid increase in net profit, and the company's operations have reached an inflection point. The company's quarterly report exceeded expectations. Combined with sales model reforms, we raised our 24-26 revenue forecast from 2031, 234, and 268.8 billion yuan to 2100, 251, and 285.8 billion yuan, and raised the 24-26 net profit forecast to mother from 96.12, 12.8 billion yuan to 124, 152, and 18.6 billion yuan, maintaining the purchase rating.
Risk warning: Competition in the industry has intensified, raw material costs have fluctuated more than expected, and foreign exchange fluctuations have exceeded expectations.