Incident: According to Great Wall Motor's announcement, wholesale sales in May were 910,000 units, down 10% year on year and 4% month on month. Of these, sales of new energy vehicles were 25,000 units, up 4% year on year and 10% month on month.
The overall wholesale sales volume in May was in line with our expectations, and the launch of several facelifted models is expected to drive up sales.
We believe that the overall sales volume in May was in line with expectations. The decrease of 30,000 units from month to month was mainly affected by the decline in pickup truck sales. Among them, the wholesale volume of new energy was 25,000, the month-on-month increase of 20,000, the wholesale volume of fuel was 67,000, and the month-on-month decrease of about 60,000 units. According to estimates from Che Emperor, the retail sales volume of Great Wall passenger cars in May was about 46,000 units, which was basically the same as the previous month.
1) Tanks: Sales of 20,000 units in May, a year-on-year increase of 95%, which is basically the same as the previous month. According to estimates from Chedi's data, the total retail sales volume of the 400/500Hi4-T is about 7,000 units; 2) Haval: Sales in May were 47,000 units, down 15% year on year, and basically flat from month to month. We expect to still be affected by inventory control for the new generation H6. According to the Haval official account, the new generation H6 has already started pre-sale, using the “Galaxy Aesthetics” design language, upgraded interior comfort, and is equipped with 1.5T+7DCT/2.0T+9DCT power systems, upgraded to the Coffee OS 2 smart cockpit system, which supports HiCar/iCCoA handcar interconnection, and is expected to drive the overall sales volume of the Haval brand to increase after launch; 3) Wei Brand: 2,862 units sold in May, down 50% year-on-year and 36% month-on-month. It is expected to be affected by the upcoming launch of the main Blue Mountain smart driving models. Equipped with five-screen linkage, 7L refrigerator, stereo dynamic to panoramic sound technology, and equipped with full-scene NOA. Referring to previous sales volume and competitive comparison, we expect monthly sales to reach more than 5,000 units after launch;
4) Euler: Selling 6005 units in May, down 43% year on year and up 28% month on month; 5) Pickup truck: Selling 15,000 units in May, down 19% year on year and 16% month on month. We think it is mainly affected by seasonal fluctuations. The launch of 2.4T passenger pickups and 2.4T commercial pickups is expected to boost sales.
Export sales in May were 34,000 units, up 37% year on year and down 5% month on month. We believe that the month-on-month decline was mainly due to brief fluctuations, and the export growth trend did not change. According to the official account, the company has changed the overseas organizational structure, reorganized the top ten fission war zones, and each regional business unit directly connects with the market and users to achieve unified and efficient allocation of resources and high-quality operation. We expect export sales to return to growth as the introduction and release of products in various regions and the acceleration of localization processes.
In the short term, export+new energy off-road will bring highly elastic growth; in the medium term, the company will break through the mainstream market under comprehensive transformation.
1) Accelerated overseas layout: Export sales exceeded 300,000 units in 2023. Currently, the company's key models are distributed in Europe, the Middle East, Australia, New Zealand, ASEAN and other regions. After the Brazilian vehicle factory is put into operation, it will accelerate the overseas localized production and marketing process, and export sales are expected to reach 400,000 to 500,000 vehicles in 2024.
2) New energy off-road is expected to bring about highly elastic growth: the new energy off-road industry has large space, tank series sales performance is impressive, and subsequent product matrix improvements are expected to further contribute to increased performance.
3) Breakthrough in mainstream markets under comprehensive transformation: ① Product refinement, close to user needs: since this year, the second-generation Big Dog Hi4 and Raptor 2024 have been launched, and the next generation of H6, Xiaolong Max facelift, Blue Mountain facelift, etc. are expected to achieve better performance; ② Changing marketing ideas: adjusting the organizational structure and building a marketing center to achieve efficient use of marketing resources; Recruiting talents from major new media to form a professional marketing team, and carry out accurate and scientific marketing on platforms such as Douyin, Station B, and Weibo; Blog, Douyin, and many live broadcasts are the marketing transformation of the Great Wall Strong proof; ③ Direct channel construction: According to the company's official account, a dual sales model with equal emphasis on direct management+distribution will be launched. As of mid-May, 44 “Great Wall Smart Choice” direct sales stores have been opened in core business districts in many cities across the country, while also recruiting and training professional teams of more than 600 people.
Investment advice: Maintain a “buy-A” rating. The company's net profit for 2024-2026 is estimated to be 134.8, 19.75, and 23.59 billion yuan, respectively, corresponding to the current market capitalization PE of 16.5, 11.2, and 9.4 times, respectively.
Considering that the company's sales structure was clearly optimized under the growth of the new energy off-road and export business in 2024, and profits are expected to rise significantly, we gave the company a price-earnings ratio of 25 times in 2024, corresponding to a target price of 39.4 yuan/share for 6 months.
Risk warning: New product developments fall short of expectations, sales of new models fall short of expectations; industry price wars continue to intensify, etc.