Date of Report: October 14, 2024
Broker Name: UOB Kay Hian
Company Overview
Great Wall Motor (GWM) is based in Baoding, Hebei province, and primarily produces and sells pick-up trucks, SUVs, and sedans under its proprietary brand. The company is listed on the Hong Kong Stock Exchange under the ticker 2333 HK. It has a market capitalization of HK$38.9 billion, and its stock is categorized under the automobile sector. The company’s share price at the time of the report is HK$15.50, with a target price of HK$23.00, representing a potential upside of 48.4%.
Sales Growth Targets for 2025
GWM is aiming for an ambitious 30% sales growth for 2025, driven by new product launches and international market expansion. The company is set to release at least 10 new models in both domestic and overseas markets. This includes eight plug-in hybrid electric vehicle (PHEV) models and two battery electric vehicle (BEV) models under the WEY and Haval brands. GWM has also outlined plans to introduce more than 10 new models into its overseas markets, with a combination of internal combustion engine (ICE), hybrid electric vehicle (HEV), and PHEV versions.
Overseas Market Expansion
GWM continues to make strides in its international expansion, with a target of 450,000 units in overseas sales for 2024, reflecting a 42% year-on-year increase. The company expects further growth of over 30% in overseas sales volume for 2025-2026. Key markets include Russia, Australia, New Zealand, the Middle East, North Africa, Southeast Asia, and Europe. GWM is gaining market share from Japanese and South Korean OEMs by offering cheaper prices and more modern products.
The company has operational plants in various international locations, including Malaysia, Indonesia, Uzbekistan, and Ghana, and manufacturing facilities in Thailand and Russia. In 2025, GWM will launch a completely knocked-down (CKD) plant in Vietnam and a manufacturing plant in Brazil, which will support the expansion into the Southeast Asian and Latin American markets.
Financial Performance
GWM is expected to maintain strong financial performance, with projected net turnover increasing from Rmb173.2 billion in 2023 to Rmb211.5 billion in 2024, and reaching Rmb284.3 billion by 2026. Net profits are forecasted to more than double from Rmb7.0 billion in 2023 to Rmb15.17 billion in 2024, with further increases projected through 2026.
The company also anticipates improvement in gross margins, with management guiding a 2-5 percentage point increase for 2024-2026. This is largely due to an expected 10-20% increase in average selling prices (ASP), driven by the growing sales of high-end products such as the Haval Menglong and the Tank 300/400/500/700 models.
Competitive Position
GWM holds a strong competitive position in niche markets such as off-road SUVs (Tank and WEY brands) and pick-up trucks. These segments, along with overseas sales, contribute 60-70% of the company’s total revenue and 70-80% of total earnings. The company has maintained stable product prices and margins in these markets, where it faces little competition. GWM’s high-end products, particularly in overseas markets, command higher selling prices, contributing to better gross margins compared to domestic sales.
Upcoming Product Launches
For 2025, GWM plans to launch several new models, including the Ora Good Cat, Haval H9, Haval H6 Hybrid, Tank 400 ICE, and refreshed pickup truck models. The company is also preparing to introduce the new Blue Mountain and Tank 400/700 models, primarily for international markets. These products will be available in ICE, HEV, and PHEV variants, enhancing GWM’s product offering and competitiveness in both domestic and overseas markets.
Valuation and Investment Recommendation
UOB Kay Hian maintains a “BUY” rating on Great Wall Motor, with a target price of HK$23.00, pegged to 12x 2025F PE. The broker notes that there is potential for upside to this target price if the company outperforms its sales growth and ASP increase expectations. Furthermore, any upgrades in earnings or positive re-rating of the price-earnings (PE) multiple could also support higher valuations.
Risks and Uncertainties
The main risks to GWM’s forecasted growth include lower-than-expected sales volumes or a failure to meet ASP growth targets. However, the report highlights that the company’s projections are conservative, leaving room for potential upside in sales and profitability.
All information provided is sourced directly from the PDF report dated October 14, 2024, by UOB Kay Hian.
