Maintain "Buy", but lower TP to HK$14.00. Great Wall Motor’s (GWM or the "Company") 4Q2023 results were in-line with our expectations. Taking into account the achievements of the Company's new energy transformation in 2023, the competitive environment of the domestic auto market in 2024, and the expected sales performance of overseas markets in the next few years, we lower our EPS forecasts for 2023-2025F to RMB0.826 (-0.032) / RMB1.122 (-0.288) / RMB1.514 (-0.285), respectively. We give the Company a TP of HK$14.00, which corresponds to 10x 2024 PE.
　　4Q2023 earnings were in-line with our expectations; sales continued to grow rapidly. In 4Q2023, the Company recorded net profit attributable to shareholders of the Company of RMB2.0 bn. The Company’s NEV penetration rate increased from 12.6% in 1Q2023 to 25.1% in 4Q2023. GWM's top line in 2023 reached RMB173.4 bn, up 26.3% yoy. Net profit attributable to shareholders of the Company was RMB7.0 bn, down 15.2% yoy. The Company's annual vehicle sales volume reached 1,230,530 units, a yoy increase of 15.3%. The average revenue per unit increased qoq, hitting RMB140,000, a yoy increase of RMB12,300. GWM's overall vehicle sales volume reached 366,659 units in 2023, up 38.3% yoy; the sales volume of NEVs was 91,657 units, up by 162.5% yoy.
　　With accelerating overseas expansion, overseas sales witnessed high growth in 2023. In 2023, the Company actively expanded its overseas business and achieved strong results. The Company recorded 2023 overseas vehicle sales of 316,018 units, a yoy increase of 82.5%. The Company's overseas automobile sales volume reached a new high growth rate mainly due to the Company's relatively wide product matrix and robust sales growth in some overseas markets (Southeast Asia, South America and Russia). The Company is accelerating its expansion pace in overseas markets, as well as accelerating overseas sales.
　　Although the Company's new energy transformation in 2023 slightly missed expectations, sales performance in the off-road and pickup truck markets was strong. The Company has actively promoted and implemented innovations in product technology, enriched its product matrix, and reformed and broadened its sales channels, thereby further promoting the new energy transformation. Tank sales volume in 2023 reached 162,539 units, a yoy increase of 31.2%. Relying on the Company’s first-mover advantage in the off-road market, the Company launched the Tank Hi4-T new energy model, which quickly achieved strong 2023 sales (33,993 units) in the market. In 2024, the Company will continue to maintain a strong competitive advantage in the off-road SUV market, especially in the hard-core off-road and light off-road submarkets. Meanwhile, the Company has a definite industry-leading advantage in pickup trucks. The cumulative sales volume of the Company’s pickup trucks in 2023 reached 202,330 units, a yoy increase of 8.5%, ranking first in China for 26 consecutive years, and the Company’s domestic end-market share of pickup trucks was 50.0%.
　　Risks: 1) Industry competition may exceed expectations; 2) sales of new vehicle models and overseas sales may fall short of expectations.