Core views
In the first quarter of 2024, the company's revenue, net profit to mother, and net profit after deducting non-net profit were 42,860 billion yuan, 3.228 billion yuan, and 2,024 billion yuan respectively; year-on-year increases of 47.60%, 1752.55%, and 1032.88%, respectively. Q1 Business performance improved significantly, mainly benefiting from the popularity of new energy vehicles, export volume, and optimization of the sales structure. Looking ahead, the company will accelerate its transformation to intelligent new energy sources. New vehicle launches and marketing system changes will boost sales. Combined with high export growth, it is expected to drive the continuous optimization of its sales structure and drive a steady increase in profitability.
occurrences
On April 24, 2024, the company released its 2024 quarterly report. The first quarter's revenue, net profit to mother, and net profit after deducting non-net profit were 42,860 billion yuan, 3.228 billion yuan, and 2,024 billion yuan respectively, up 47.60%, 1752.55%, and 1032.88% year-on-year respectively, with year-on-month increases of -20.20%, 59.26%, and 97.25%, respectively.
Brief review
Q1 Significant improvement in business performance, mainly benefiting from sales structure optimization and export volume.
24Q1's revenue, net profit attributable to mother, and net profit after deducting non-net profit were 42,860 billion yuan, 32.28 billion yuan, and 2,024 billion yuan, respectively, +47.60%, +1752.55%, and +1032.88% year-on-year, respectively, -20.20%, +59.26%, and +97.25%, respectively. On the revenue side, Q1 revenue was 42,860 billion yuan, a record high for the same period; +47.60% year-on-year, mainly due to the company's increased vehicle sales and bicycle revenue. On the one hand, 2
4Q1 The company's vehicle sales volume was 27.53
10,000 units, +25.17% year over year, mainly driven by high growth in exports and sales of new energy vehicles.
Among them, fuel vehicles and new energy vehicles were sold respectively 212,200 units and 592,000 units, respectively, +12.48% and +112.82%, respectively; domestic sales and exports were 182,600 units and 92,800 units, respectively, +8.67% and +78.51% year-on-year respectively. On the other hand, based on revenue calculation, ASP was about 155,700 yuan/vehicle, +17.92% year-on-year, which also contributed greatly to Q1 revenue growth.
By brand, the sales volume of Haval/Weipai/Great Wall pickup/Eulla/tank was 157,900 units/43,500 units/15,000 units/492,000 units, respectively, +25.53%/+182.34%/-10.90%/-15.41%/+103.16%, respectively. During the reporting period, the five major brands ushered in a variety of product refreshes, boosting the popularity of the company's vehicles. Examples include the accelerated spread of the “Great Wall Hi4” new energy technology, the official delivery of the limited edition of the 700 Hi4-T tank, and Weipai Alpine boosts brand value. In terms of pattern, the company continues to rank first in sales in the hardcore off-road market, off-road new energy market, and pickup truck market. Q1 revenue was -20.20% month-on-month, in line with seasonal characteristics under Spring Festival disturbances, and consistent with the trend of sales fluctuations (-24.91% month-on-month). On the profit side, Q1 net profit and net profit after deducting non-net profit were +1752.55% and +1032.88% year-on-year, respectively. The main reason was the high increase in vehicle sales combined with product structure optimization and export volume. In addition, there were positive effects such as good cost control and increased other revenue (mainly increased government subsidies and VAT deductions). 24Q1's tank brands and export sales accounted for 17.86% and 33.70% respectively, up 4.66 pcts and 8.20 pcts respectively from the full year of 2023. Due to the high gross margin of related models, their volume not only helped to dilute costs, but also improved the company's own profit structure. Q1 Net profit attributable to mother and net profit after deducting non-net profit was +59.26% and +97.25% month-on-month. It also benefited from factors such as the optimization of the above sales structure, good fee control, and other revenue increases.
Q1 Gross profit margin and net margin improved across the board, and the cost control situation was good. The 24Q1 company's gross profit margin and net margin were 20.04% and 7.53%, respectively, +3.97pct and +6.92pct year-on-year, and +1.57pct and +3.76pct month-on-month, respectively. The month-on-month increase in gross margin mainly benefits from factors such as vehicle sales volume and structural optimization, including the popularity of high-margin tank brands. In addition to gross profit factors, the month-on-month increase in net interest rates is mainly related to steady fee control and the increase in other earnings mentioned earlier. The Q1 period/sales/management/R&D/finance expense rates were 11.11%, 3.98%, 2.34%, 4.57%, and 0.22%, respectively. The year-on-year ratio was -2.87pct, -1.03pct, -1.31pct, -0.71pct, +0.18pct, -1.87pct, -0.72pct, -0.18pct, +0.97pct. Overall, the cost control situation was good.
The company focuses on the “new energy+intelligence+globalization” development strategy, which is expected to promote the continuous improvement of the company's product strength and profitability. 1) New energy: In 2023, Great Wall Motor will comprehensively develop intelligent new energy, accelerate product structure optimization, and intensively release 15 new energy models to achieve full scenario and category coverage. Sales of new energy vehicles totaled 256,400 units throughout the year, up +113.88% year-on-year, doubling. In March of that year, the company issued a new energy declaration and launched the new energy mobility solution, the Hi4 hybrid technology system, covering all categories of everyday urban driving to cool off-road.
24Q1 sold 592,000 new energy vehicles, +112.82% year-on-year, and the growth rate was significantly higher than that of the industry (industry NEV sales +31.8% year over year, China Automobile Association caliber); in the future, it will continue to iterate technology and improve the forest ecosystem to fully contribute to smart new energy sources. As new models such as the 300 Hi4-T tank and the Blue Mountain facelift are launched one after another, the company's product strength is expected to be further improved and sales of new energy models will continue to be boosted. 2) Intelligence: In 2023, the company stepped up intelligent research and development efforts, and comprehensively laid out electronic and electrical architectures, intelligent assisted driving, smart wire-controlled chassis, and smart cockpits. The number of patents disclosed in the field of intelligence ranked first among the Chinese private vehicle enterprise group. The Weipai Blue Mountain Smart Driving Edition, which was recently unveiled at the 2024 Beijing Auto Show, is equipped with the Coffee Pilot Ultra smart driving system and the Coffee OS 3 smart cockpit system, which highlights full-scene NOA core technology and further enhances the company's product competitiveness in the field of smart driving. In the future, the company will increase investment in technological innovation and accelerate the application of innovative results, which is expected to further empower its models to achieve sales growth and increase bicycle profits. 3) Globalization: In 2023, Great Wall Motor's overseas annual sales exceeded 300,000 vehicles for the first time, achieving full coverage of the ASEAN and GCC regional markets, and issued a global brand strategy and “ONE GWM” action plan to fully integrate the company's superior overseas brand resources. The 24Q1 company exported about 92,800 vehicles, +78.51% year over year, and the growth rate was also higher than that of the industry (industry exports +33.2% year on year, China Automobile Association caliber). In the future, the company will continue to promote the implementation of the new “ecological overseas” model, continue to explore other overseas markets such as the Middle East, North Africa, and Europe, and is expected to further optimize its sales structure and improve its overall profitability through export volume.
The channel model has ushered in major changes, which will further help the company optimize vehicle sales and product structure. In April 2024, Great Wall Motor launched a “double sales” innovation model, a channel network with equal emphasis on “direct sales+dealer sales”, and officially released its “Great Wall Smart Choice” direct sales system. Starting May 1, the company will open 33 “Great Wall Smart Choice” direct sales stores in 17 cities across the country, all located in high-traffic shopping malls in the core business district, and recruit and train a team of more than 600 highly qualified young product experts to optimize channel-side marketing and service capabilities. “Great Wall Smart Choice” will take the lead in selling major models from brands such as Weipai and Tank, which will help drive the company's sales growth and product structure optimization, and accelerate the transformation towards intelligent new energy sources.
Investment advice
The company has accelerated its transformation to intelligent new energy sources. New vehicle launches and marketing system changes have boosted sales. Combined with high export growth, it is expected to promote continuous optimization of its sales structure and drive a steady increase in profitability. We expect the company's net profit from 2024-2025 to be 11 billion yuan and 14.5 billion yuan, corresponding to current stock prices of 20X and 16X.
Risk analysis
1. The industry boom falls short of expectations. Domestic economic recovery rebounded steadily in 2024, but the exact pace remains to be seen. Demand in the automotive industry may fluctuate accordingly; it will still take time to fully implement the trade-in policy for consumer goods such as automobiles, which will affect the recovery process of industry demand.
2. Export sales fell short of expectations. Exports are affected by various factors such as the international situation, national policies, and exchange rates, and there is a risk of fluctuations in overseas sales growth.
3. The competitive pattern of the industry has deteriorated. Domestic competitors are speeding up product launch. With changes in supply factors such as technological progress and new production capacity investment, future industry competition may intensify, and the company's market share and profitability may fluctuate.
4. The company's channels and sales volume of new models fell short of expectations. The company's channel construction and dealer optimization progress may fall short of expectations. There is a risk that sales volume of new models will fall short of expectations due to market demand.