20250331-招银国际-长城汽车-601633.SH-Wey_could_be_key_to_FY25_earnings_growth_5页_1mb

Great Wall Motor (2333 HK/601633 CH) Summary

Core Content

Great Wall Motor (GWM), listed as 2333 HK and 601633 CH, is a Chinese automotive company that has been analyzed for its FY25 earnings growth potential. The report highlights that while the company's 4Q24 revenue slightly missed expectations, its gross profit margin (GPM) and selling, general, and administrative (SG&A) expenses exceeded forecasts. The key driver for future growth is expected to be the Wey brand, which is anticipated to significantly contribute to sales volume and profit growth in FY25E.

Main Points

• 4Q24 Performance:

  • Revenue missed by 9% due to a decline in average selling price (ASP).
  • GPM was 19.1%, which is 0.4ppts higher than the forecast.
  • SG&A expenses were RMB900mn lower than expected.
  • Forex loss from ruble depreciation was lower than most peers.

• FY25E Outlook:

  • Sales volume is projected to rise 9% YoY to 1.35mn units.
  • A total of 6 new models (3 for Haval, 3 for Wey) are expected to be launched.
  • Overseas sales are anticipated to increase by 28% YoY to 0.58mn units.
  • ASP is expected to continue rising by 1% YoY to RMB143,000.
  • Gross profit is forecasted to increase to RMB42.5bn, with 36% of the growth attributed to Wey.
  • Net profit is revised down to RMB13.1bn, a 5% cut, due to lower overseas ASP and GPM.
  • Net cash position is expected to strengthen, potentially boosting net finance income.
  • A possible forex gain in FY25E could also positively impact net profit.

• Valuation and Investment Rating:

  • Maintain BUY rating for both A and H shares.
  • H-share target price is HK$17.00, based on 10x revised FY25E EPS.
  • A-share target price is RMB32.00, based on the current A/H premium of about 100%.
  • Key risks include lower sales volume and margins, slower tech transformation, and sector de-rating.

Key Financial Metrics

Stock Performance

Key Risks

• Lower-than-expected sales volume and margins.
• Slower-than-anticipated tech transformation.
• Sector-wide de-rating.

Analysts and Contact

• Ji SHI, CFA: (852)37618728, shiji@cmbi.com.hk
• Wenjing DOU, CFA: (852)69394751, douwenjing@cmbi.com.hk
• Austin Liang: (852)39000856, austinliang@cmbi.com.hk

CMBIGM Ratings

Company Overview

Great Wall Motor is a key player in the Chinese automotive sector with a focus on expanding its market share through new models and overseas growth. The report suggests that the company has a solid foundation for future earnings growth, particularly with the Wey brand leading the way. Despite a revenue miss in 4Q24, the company's GPM and SG&A performance were better than expected, and the outlook for FY25E remains positive.

Conclusion

Great Wall Motor is projected to experience growth in FY25E, driven by new model launches and overseas expansion. The company's financial performance in 4Q24, while mixed, indicates potential for improvement. The BUY rating is maintained for both A and H shares, with target prices based on current valuation metrics and market expectations. Investors are advised to consider the potential risks and conduct independent evaluations before making investment decisions.