Status: Breaking through bottlenecks and entering a new stage of profit. Overseas has become an important increase in the future. Since 2021, Great Wall Motor has entered a new stage of profit. Thanks to the increase in the share of high-priced models such as tanks and the contribution of going overseas, the company's financial indicators have been improving steadily. The company's bicycle profit reached 0.012 million yuan in the first three quarters of 2024, a record high. Looking at the sales structure, the company's domestic market has maintained a large advantage in the pickup and hardcore off-road segments in recent years, but the mainstream market is under pressure; the overseas market is an important growth direction for the company in recent years and in the future. The company's share of overseas revenue and profit continues to increase. In 2023, overseas revenue accounted for 31%, and gross profit accounted for 43%, which is at the forefront of the industry.

Opportunity: Chinese car companies are on the rise. Great Wall Motor has great potential. Due to the shortage of overseas supply and rising inflation, overseas production and car purchase costs continue to rise. Coupled with external environmental opportunities caused by geopolitical conflicts and the increase in China's automobile product power, Chinese car companies are in a period of historical opportunity. The growth rate of overseas trips is much higher than that of the domestic market. From January to August 2024, sales volume was 3.52 million vehicles, up 31% year on year. From the perspective of a global leader, high-quality product capability+deep localization is a successful factor in going overseas. Most Chinese overseas models lead overseas competitors in terms of price, size, power, and intelligence. Great Wall Motor seizes the opportunity to go overseas. Since 2021, overseas sales have accelerated markedly. From January to August 2024, overseas sales reached 0.28 million vehicles, an increase of 54% over the previous year, and showed a “one super strong” situation. Among them, Russia accounted for more than 50%. Markets such as Australia, Brazil, South Africa, and Mexico also contributed significant increases, and Great Wall's total overseas share continued to rise at an accelerated pace. By brand, the company's five brand models all participated overseas. In 2023, Haval, Pickup, Tank, and Euler accounted for 71.2%, 13.9%, 8.1%, and 6.6% of overseas sales, respectively. Among them, tanks increased significantly this year. Sales volume reached 0.03 million vehicles from January to August 2024, accounting for 10.8%.

Outstanding: Adhering to the long-term principle of a comprehensive layout of research, production and marketing, Great Wall Motor has the genes for global success: 1) The company's overseas models have excellent competitiveness and are both configuration and cost performance. For example, the size, power, and fuel consumption of the Haval Jolion are generally superior to the Lada Niva Travel, the most popular SUV in Russia. 2) The company adheres to the full layout of production capacity, channels, R&D, after-sales and brand culture with a long-term principle, and is deeply involved in overseas localization. Great Wall has 3 full-process manufacturing plants overseas, more than 7 KD plants, a total overseas production capacity of more than 0.46 million vehicles per year, 7 overseas R&D centers, and more than 1,300 overseas channels, and remarkable hard power. 3) The overseas pickup market is vast, and the Great Wall has significant differentiating advantages.

The company has potential to expand into new markets such as Brazil and Mexico. It will continue to launch new models overseas, and the channels that have accelerated layout in the past year will also usher in a harvest period. For example, in 2023, Great Wall Pickup sold 0.006 million vehicles in Russia, with a market share of 56.9%. With alpha support and short-term certainty, Great Wall Overseas is expected to contribute better revenue and profit elasticity.

Investment advice: Seize the opportunity to go global and open up a broad world overseas 1) Domestic: The company's total domestic market is under pressure, and the increase in the share of high-priced models represented by tanks will increase profitability. In 2025, the company will enter a new car cycle. Domestic sales are expected to rebound year-on-year, and Tank, Wei Brand, and Euler are expected to achieve significant new vehicle growth. 2) Overseas: The overseas portion has become an important source of the company's sales and profit growth. In the context of Chinese car companies going overseas, the company has also surpassed the market. The company's overseas model products are highly competitive, adhere to the in-depth layout of production capacity, channels, R&D, after-sales, and brand culture on a long-term basis. At the same time, it has the differentiated advantages of pickup trucks. The company has the genes for global success. With α support and short-term certainty, I am optimistic that the company will lead Chinese car companies overseas in the future, continuously enhance its influence and competitiveness globally, and contribute to good profit elasticity. The company's net profit for 2024-2026 is estimated to be 12.69, 16.05, and 17.95 billion yuan. The corresponding PE for A-shares is 17.9X, 14.1X, 12.6X, and 7.8X, 6.2X, and 5.5X for Hong Kong stocks.

Risk warning

1. Risk that economic growth falls short of expectations; 2. Industry competition increases risk; 3. Overseas expansion rate and sales volume fall short of expectations; 4. Changes in the global policy environment; 5. Risk that profit forecasting assumptions are unfounded or fall short of expectations.