Maintain "Buy", and raise TP to HK$15.00. Great Wall Motor’s (GWM, or the "Company") results in 3Q2023 beat our expectations. Since the Company has been enhancing product competitiveness and enriching product matrix, along with rapid growth in overseas sales and price reductions in upstream parts, the Company’s earnings beat our expectations in 3Q2023. Hence, we revise up our previous EPS forecasts for 2023-2025F to RMB0.858 (+0.381) / RMB1.360 (+0.366) / RMB1.799 (+0.232), respectively, with a PE valuation of 10x in 2024, corresponding to the Company's TP of HK$15.00.
　　3Q2023 earnings witnessed a leap, beating our expectations; and sales continue to grow rapidly. GWM's top line increased significantly in 3Q2023, reaching RMB49.5 bn, up 32.6% yoy. In 3Q2023, its GPM dropped slightly by 0.8 ppt yoy to 21.7%; the Company recorded net profit attributable to shareholders of RMB3.64 bn, up 41.9% yoy and 206.1% mom; GWM's overall vehicle sales volume reached 344,819 units, up 21.5% yoy; among them, the sales volume of NEVs were 77,121 units, soared by 131.4% yoy. The Company’s NEV penetration rate has increased quarter by quarter, from 12.6% in 1Q2023 to 22.4% in 3Q2023. The Company's net profit attributable to the parent company excluding extraordinary profit and loss reached RMB3.06 bn, up 34.0% yoy and 216.4% mom, hitting a record high.
　　With accelerating overseas ecological expansion, overseas sales in 4Q2023 are expected to continue to witness high export growth. Under the clear strategic landscape of “Overseas Ecosystem”, GWM is mainly focused on western European, ASEAN, Middle Eastern and South American markets, and has established multiple full-process vehicle production bases in the above markets. Also, the Company's new vehicle models launched in the above regions all received good market response from local customers. The Company’s overseas sales remained robust, with average monthly overseas sales in 3Q2023 reaching 29,255 units, and exceeding 30,000 units in August and September for two consecutive months. The Company's export sales soared by 89.4% yoy in 1-9M2023 to 211,696 units (24.5% of total sales volume in 1-3Q2023). We believe that as more vehicle models are being scheduled to launch in overseas markets, coupled with the Company's increased product competitiveness and enriched product matrix, the Company’s 4Q2023 export sales will continue to achieve high growth.
　　GWM’s brand image has been strengthening and the Company steps into a new era of rapid development. The Company's brand image has continuously been strengthening in the domestic market and abroad, resulting in steadily increased ASP qoq, climbed from RMB132,000 in 1Q2023 to RMB144,000 in 3Q2023. We believe that GWM is stepping into a new era of rapid development, mainly supported by 1) the improvement in product competitiveness brought by the Company's technological empowerment; 2) the continuous deepening of the Company's global layout; 3) the accelerated expansion of the sales channel network that covers all over the world and exporting vehicles to more than 170 countries and regions; and 4) the continuously enriched product matrix and upgraded vehicle model structure.
　　Risks: 1) Industry competition may exceed expectations; 2) sales of new vehicle models and overseas sales may fall short of expectations.