Bocom International released a research report stating that Great Wall Motor (02333) released a performance forecast for the first half of 2024, with an expected net income attributable to the parent company of 6.5 billion to 7.3 billion yuan (RMB, same below), a year-on-year increase of 377.5% to 436.3%. The non-net profit is between 5 billion yuan and 6 billion yuan, a year-on-year increase of 567.1% to 700.6%. Calculated based on the median of the performance forecast, the net profit / non-net profit attributable to the parent company of Great Wall Motors in the second quarter was 3.67 billion yuan/3.47 billion yuan, respectively, an increase of 13.8%/71.7% compared with the previous quarter. Although the sales volume of Great Wall Motors in the first half of the year was stable, the sales volume of high-priced models increased significantly, and the proportion of export sales also increased significantly, which helped to maintain a strong profit trend in the second quarter.
The bank raised its gross margin forecast for 2024/25 from 17.6%/17.6% to 20.2%/20.6%, mainly reflecting the increase in tank brand sales and the increase in overseas sales ratio. Although sales volume remained stable, the improvement of product structure is expected to continue to improve the profitability level in the second half of the year. The bank raised its profit forecast for 2024/25 by 65.5%/77.8%. The bank maintains a buy rating and raises the target price to HKD16.3 (original HKD12.25) based on a forecast price-to-earnings ratio of 10.6 times in 2024 (the average historical price-to-earnings ratio level over the past two years).