Product structure optimization combined with export volume, and net profit increased 224% year-on-year in the second quarter. 24Q2 achieved revenue of 48.57 billion yuan (24Q2 overall vehicle sales 0.28 million vehicles, -6.5% YoY, +1.5% month-on-month, 24Q2 export sales 0.109 million vehicles, +51.1% YoY, +17.2% month-on-month), +18.7% YoY, +13.3% month-on-month, net profit attributable to mother 3.85 billion yuan, +19.3% YoY; net profit of 3.63 billion yuan YoY + 275.3%, +79.2% month-on-month. Thanks to the growth of export business and the continuous optimization of the company's product structure, the company's performance was released steadily.

The profitability of bicycles increased month-on-month. By brand, the Great Wall Motor 24Q2 Haval brand sold 0.142 million vehicles, 10.2% month-on-month; the WEY brand sold 0.01 million vehicles, +6.8% month-on-month; the Euler brand sold 0.017 million vehicles, +11.3% month-on-month; and the tank brand sold 0.067 million vehicles, +35.9% month-on-month; the product line was stable. In terms of rate, the company's sales/management/R&D expense rates are 4.3%/2.1%/4.6%, -0.1/-0.4/-0.2pct year on year, +0.3/-0.0pct month-on-month, and cost control is stable; 24Q2's bicycle revenue is 0.171 million yuan, +0.034 million yuan year on year, and +0.015 million yuan month-on-month, which is mainly expected to increase in export share: 24Q2 exports account for 38.2%, year-on-year +14.2pct, month-on-month + 4.5 pct; 2) Product structure optimization: 24Q2 middle and high-end tank brands accounted for 23.5% of sales, +12.1% year-on-year, +5.7pct month-on-month; 24Q2 bicycle profit to mother was 0.0135 million yuan (0.0117 million yuan for 24Q1, 0.004 million yuan for 23Q2), and profitability increased year-on-month.

The new energy strategy continues to advance, and we are optimistic that product and technology upgrades will drive sales. 1) Product dimensions: In August, the Weipai Blue Mountain Smart Driving Edition was officially launched, equipped with the next-generation intelligent driving system CoffeePilot Ultra, and the subsequent facelift model ushered in the new product cycle; 2) Technical dimensions: precise investment in the three fields of hybrid, pure electricity, and hydrogen energy, launch various strategies and advanced technologies, and release the intelligent four-wheel drive electric hybrid technology Hi4; in terms of intelligence, it has global self-development capabilities from sensing hardware to computing platforms; 3) Organizational transformation dimension: building an organizational structure with a “strong back office, large center, and small front desk” The package runs through the whole vehicle to The forest ecosystem, which is the core component, continues to empower the Great Wall's new energy transformation and upward development; 4) Overseas market sales surpassed 0.3 million vehicles for the first time in 2023, and ecological going overseas is progressing steadily. Currently, it has been exported to more than 170 countries, has a global sales network of more than 1,000 companies, and all five of its major brands have gone overseas.

Risk warning: There is a risk of declining sales in the industry, and the risk that sales of new models will not meet expectations.

Investment suggestion: Considering the sales growth brought about by the product matrix supported by the new models, the profit forecast was raised. The net profit of Great Wall Motor in 24-26 is expected to be 11.66/13.8/15.97 billion yuan (original forecast 8.93/10.69/12.74 billion yuan), EPS is 1.37/1.62/1.88 yuan (original forecast 1.05/1.26/1.50 yuan), corresponding PE is 17/14/12x. Continue to be optimistic about the upward performance brought about by Great Wall New Energy's strategic transformation Motivation maintains a “superior to the market” rating.