20221024-招银国际-长城汽车-02333.HK-3Q22_beat__upcoming_new_models_as_key_4页_824kb

Great Wall Motor (2333 HK) Summary

Core Content

Great Wall Motor (2333 HK) reported strong performance in 3Q22, beating market expectations. The company plans to launch 18 new models in 2023, which could significantly impact its share price if any of them exceed sales expectations. The analyst maintains a BUY rating with a target price of HK$ 10.00, which is based on a 10x P/E multiple of the FY23E forecast. The current share price is HK$ 7.56, indicating a potential upside of +32.3%.

Key Financial Highlights

Earnings Summary (YE 31 Dec)

• Revenue (RMB mn): FY20A: 103,308; FY21A: 136,405; FY22E: 146,637; FY23E: 155,590; FY24E: 188,184
• YoY growth (%): FY20A: 7.4; FY21A: 32.0; FY22E: 7.5; FY23E: 6.1; FY24E: 20.9
• Net income (RMB mn): FY20A: 5,362; FY21A: 6,726; FY22E: 10,377; FY23E: 8,054; FY24E: 10,227
• EPS (RMB): FY20A: 0.58; FY21A: 0.73; FY22E: 1.12; FY23E: 0.87; FY24E: 1.09
• YoY growth (%): FY20A: 19.2; FY21A: 25.4; FY22E: 54.3; FY23E: (22.4); FY24E: 27.0
• P/E (x): FY20A: 10.8; FY21A: 8.4; FY22E: 5.9; FY23E: 7.6; FY24E: 6.0
• P/B (x): FY20A: 1.0; FY21A: 0.9; FY22E: 0.8; FY23E: 0.8; FY24E: 0.7
• Yield (%): FY20A: 3.7; FY21A: 1.3; FY22E: 5.8; FY23E: 4.5; FY24E: 5.6
• ROE (%): FY20A: 9.6; FY21A: 11.3; FY22E: 15.5; FY23E: 10.6; FY24E: 12.1

3Q22 Performance

• Net profit: RMB 2.6bn, a 53% increase from the prior forecast.
• ASP: Increased by 5% above the forecast.
• GPM: Increased by 2.3 ppts above the forecast.
• Revised FY22E net profit: Raised by 14% to RMB 10.4bn.

Main Points

• Strong Q3 Performance: Great Wall Motor exceeded expectations in 3Q22, driven by higher ASP and GPM.
• Upcoming New Models: The company plans to launch 18 new models in 2023, which could be pivotal in driving sales and share price performance.
• Sales Performance: Despite the strong Q3 results, the analyst maintains that FY23E sales and net profit forecasts are significantly below consensus, which may lead to a short-lived share price rebound.
• Management Strategy: Management is prioritizing market share over profitability in 2023, which aligns with the expectation that raising retail prices will be more challenging than in 2022.
• Valuation: The target price of HK$ 10.00 remains unchanged, based on a 10x P/E multiple of FY23E earnings.
• Key Risks: Lower sales volume, reduced margins, and slower-than-expected tech transformation could affect the rating and target price.

Share Performance

• Market Cap (HK$ mn): 69,240
• Avg 3 mths t/o (HK$ mn): 459
• 52w High/Low (HK$): 37.72 / 6.90
• Total Issued Shares (mn): 9,236
• Shareholding Structure:
  • Wei Jianjun: 56.4%
  • Others: 43.6%

Share Performance Trends

Financial Summary

Income Statement (YE 31 Dec)

• Revenue: FY20A: 103,308; FY21A: 136,405; FY22E: 146,637; FY23E: 155,590; FY24E: 188,184
• Cost of sales: FY20A: (85,531); FY21A: (114,367); FY22E: (117,755); FY23E: (127,619); FY24E: (154,157)
• Gross profit: FY20A: 17,777; FY21A: 22,037; FY22E: 28,882; FY23E: 27,971; FY24E: 34,027
• Net profit: FY20A: 5,362; FY21A: 6,726; FY22E: 10,377; FY23E: 8,054; FY24E: 10,227

Cash Flow Summary (YE 31 Dec)

• Net cash from operating: FY20A: 5,181; FY21A: 35,316; FY22E: 4,437; FY23E: 19,261; FY24E: 23,580
• Capex: FY20A: (8,062); FY21A: (13,091); FY22E: (9,224); FY23E: (9,606); FY24E: (11,140)
• Net cash from financing: FY20A: 11,368; FY21A: (9,632); FY22E: (6,649); FY23E: (4,104); FY24E: (4,223)

Balance Sheet (YE 31 Dec)

• Total assets: FY20A: 154,011; FY21A: 175,408; FY22E: 175,130; FY23E: 187,876; FY24E: 213,268
• Shareholders' equity: FY20A: 57,342; FY21A: 62,128; FY22E: 72,104; FY23E: 79,886; FY24E: 88,562

Key Ratios

CMBIGM Ratings

• BUY: Potential return of over 15% over the next 12 months.
• HOLD: Potential return of +15% to -10% over the next 12 months.
• SELL: Potential loss of over 10% over the next 12 months.

Analyst Certification

The analyst certifies that all views expressed in the report accurately reflect personal opinions and confirms that there are no conflicts of interest related to the securities discussed.

Important Disclosures

• This report is not investment advice and is provided solely for informational purposes.
• The information is subject to change and not guaranteed.
• CMBIGM is not a registered broker-dealer in the U.S. and is not subject to U.S. regulations regarding research reports.
• The report is for the use of intended recipients only and may not be reproduced or distributed without prior written consent.