Maintain “Buy” and raise the TP to HK$16.00. The 2023 EPS forecast was in line with our expectations. Considering Great Wall Motor’s (GWM or the "Company") impressive sales performance in overseas markets and high-end off-road vehicles, we raise 2024-2025 EPS forecasts to RMB1.24 (+0.13)/ RMB1.56 (+0.06), and the 2026 EPS forecast is newly added to be RMB1.83, giving a valuation higher than that of comparable companies. We give the Company a PE of 11x in 2024, and raise the TP to HK$16.00 (previous HK$14.00), and the "Buy" rating is maintained.
1Q2024 sales performance was impressive, with average sales price per vehicle/net profit increasing yoy. The Company achieved revenue of RMB42.86 bn in 1Q2024, up 47.6% yoy/ -20.2% mom, and net profit attributable to Shareholders was RMB3.23 bn, up 1752.6% yoy and 59.3% mom. Net profit excluding extraordinary profit and loss to Shareholders was RMB2.02 bn, up 1032.9% yoy and 97.3% mom. The sales performance in 1Q2024 was strong, with the average sales price per vehicle/ net profit increasing yoy. The larger non-recurring profit and loss in 1Q2024 was mainly due to the government subsidy of RMB620 mn.
The results of proactive overseas business expansion are gradually showing, and the GPM in 1Q2024 increased yoy. The GPM in 1Q2024 was 20.0%, which increased significantly yoy, mainly driven by product structure optimization and overseas sales exports. In 1Q2024, the Company's export sales reached 92,800 units, up 78.5% yoy. The profitability of the Company's overseas vehicle sales was higher than that of domestic vehicle sales. The overseas market expansion progress and sales performance also showed an accelerating growth trend. The Company's overall profitability is expected to continue to increase in the future.
Overseas business deployment is accelerating, and the global product matrix is increasingly expanding. The Company actively promotes the development of overseas export business through product technology innovation, channel expansion and reform, production localization, etc. Brands such as WEY/ Tank/ ORA continue to make breakthroughs in overseas markets. We expect that the Company's export sales will maintain high growth momentum in 2024.
Risks: 1) The NEV industry competition may exceed expectations; 2) sales of new vehicle models may fall short of expectations.