Incident: The company released its 2024 semi-annual report. 2024H1 achieved operating income of 91.429 billion yuan, a year-on-year increase of 30.67%, achieved net profit of 7.079 billion yuan, a year-on-year increase of 419.99%, and H1 achieved net profit without return to mother of 5.651 billion yuan, an increase of 654.04% over the previous year; of these, Q2 achieved operating income of 48.569 billion yuan, an increase of 18.66% over the previous year, and achieved net profit to mother of 3.851 Billions of yuan increased by 224.40% year on year, and net profit without return to mother was 3.627 billion yuan in Q2, an increase of 275.28% year on year.

Increased overseas sales and further optimization of the domestic product structure led to a year-on-year increase in gross profit:

2024H1's gross profit margin was 20.74%, +3.89pct year on year, mainly due to 24H1 overseas sales growth and further optimization of domestic product structure, driving gross profit growth; 2024H1 sales expense ratio 4.16%, -0.49pct year on year; management expense ratio 2.19%, -0.77pct year on year; R&D expense ratio 4.58%, year-on-year -0.44pct.

The level of intelligence continues to rise, and overseas sales volume increased year-on-year: in the field of intelligence, Great Wall Motor achieved global intelligence such as vehicle intelligence, connectivity intelligence, and platform intelligence. The largest supercomputing center in the automotive industry has been built, and an intelligent driving product set with a full computing power platform has been built to meet the differentiated needs of users. For smart cockpits, Great Wall Motor has developed its own Coffee OS smart cockpit system. For smart chassis, Great Wall Motor incorporates core technologies such as wire-controlled steering, wire-controlled motion, CTC, and integrated die-cast aluminum body. Based on the new electronic and electrical architecture and IDC3.0 autonomous driving system, it has achieved features such as supersensing, high integration, and strong expansion; in terms of globalization, Great Wall Motor continues to gain strength in the global market, with 24H1 overseas sales of 199,847 vehicles, an increase of 62.09% over the previous year. Great Wall Motor focuses on the “four new international modernizations” of localizing production capacity, localization of operations, cross-cultural brand and supply chain security, and promoting comprehensive overseas marketing of research, production, supply, sales, and services, forming a full-category, full-scale product matrix, and plans to sell more than one million vehicles overseas by 2030.

Investment advice: We expect the company to achieve net profit of 12.089/14.143/16.479 billion yuan in 2024-2026, corresponding PE of 16.44/14.05/12.06 times, respectively, to maintain an “increase in holdings” rating.

Risk warning: Increased market competition; risk of macroeconomic fluctuations; progress of new products falls short of expectations.