Description of the event

Great Wall Motor announced production and sales announcements for May 2024.

Incident comments

The Great Wall sold 910,000 units in May 2024, and overseas sales fluctuated slightly from month to month due to international shipping. 1) Overall situation: Total sales volume in May was 91,460 units, -9.5% YoY, -3.5% YoY; of these, NEV sales volume was 24,649 units, +3.8% YoY, +9.9% month-on-month, and NEV passenger vehicle sales accounted for 27.0%, -1.9pct YoY and +3.3pct month-on-month. Looking at cumulative sales volume, the cumulative sales volume in January-May was 462,000 units, +11.5% year on year, and the cumulative sales volume of new energy vehicles was 106,000 units, +60.0% year on year. New energy passenger vehicle sales accounted for 27.6%, or +7.4 pct year on year. 2) By brand: In May, the Haval brand sold 47,066 units, -15.3%, the same; the tank brand sold 20,326 units, +94.9%, -0.7% month-on-month; the Euler brand sold 6,005 vehicles, -43.4%, +28.1% month-on-month; the WEY brand sold 2,862 units, -50.4%, and -16.4% month-on-month. 3) Overseas: In May, sales volume was 34,477 vehicles, +37.2% year over year, -4.6% month on month, accounting for 37.7% of sales, +12.8 pct year on year, and -0.4 pct month on month. Overseas sales in January-May totaled 163,000 vehicles, +65.2% year on year, accounting for 35.4% of sales volume, +11.5pct year on year.

The company accelerates its global layout, resolves the transformation of new energy sources, and actively transforms and innovates, and is expected to continue to boost both sales and performance.

1) On the domestic side, the Great Wall has fully adjusted the three dimensions of product, channel, and supply chain. The company is steadfastly deepening the transformation of new energy sources. The product focus is on plugging into the hybrid circuit. New cars are clearly positioned to accelerate the launch of smart new energy products. Various new cars from various brands such as Haval, Tank, WEY, Euler, and Pickup are expected to contribute significant increases in the future. 2) In terms of going overseas, the company's “ONE GWM” strategy has accelerated overseas. The overseas market has covered more than 170 countries and regions, and there are more than 1,000 overseas sales channels. While export sales continue to grow, the Rayong plant in Thailand has mass-produced various models, and the Brazilian project is also progressing steadily, which will accelerate the company's sales growth in the future. 3) In the era of intelligence, data and algorithms are the core of competition. Great Wall Motor actively promotes sales volume and intelligent model development, and the strength of intelligence is expected to continue to strengthen in the future.

Investment advice: In the short to medium term, the company's accelerated overseas expansion combined with the increase in the share of high-value models such as domestic tanks is expected to drive the company's sales and performance growth. In the long run, the company's four major expansion strategies will open up room for long-term sales growth, and intelligent transformation will open up profit space for the entire industry chain. The company's net profit for 2024-2026 is estimated to be $130.1, 160.2, and 17.79 billion yuan, respectively, corresponding to PE 16.5X, 13.4X, and 12.0X for A-shares, corresponding to PE 7.3X, 5.9X, and 5.3X for Hong Kong stocks, maintaining a “buy” rating.

Risk warning

1. The industry price war weakens corporate profits;

2. The recovery of the global economy fell short of expectations.