Great Wall Motor (601633): Cycling Indicators Improved, Lowering Expected Sales Target

Great Wall Motor (601633): Cycling Indicators Improved, Lowering Expected Sales Target

Great Wall Motor (601633): Cycling Indicators Improved, Lowering Expected Sales Target
1H19 earnings are forecast to fall 58 year-on-year.6% Great Wall Motor announced the first half of 19th year’s performance forecast: total operating income is about 413.8 ‰, at least -15.0%, net profit attributable to mother is 15.3 trillion, one year -58.6%, net profit after deduction is about 12.4 trillion, -65 a year.4%.Net profit in the second quarter slightly exceeded our Air Force’s 6 million forecast. Points of Attention National Five went to the library without any damage, and the bicycle indicators improved month-on-month.Sales in the second quarter were MOM 26.1%, total operating income is about 187.5 ‰, at least -15.2%, MoM-17.2%, net profit attributable to mother is about 7.6 trillion a year -53.1%, -2.1%, net profit performance outperformed revenue outperformed sales.Bicycle revenue in the second quarter increased by approximately 9,700 yuan, exceeding the level in the third quarter of last year, and bicycle net profit increased by approximately 880 yuan.The average price has increased significantly beyond expectations, and product structure improvement is the core. The sales of H6, F7, and WEY products have respectively increased from the previous month.5ppt, 0.5ppt and 0.3ppt, M6 sales share decreased by 2 MoM.7ppt.Our budget 2Q19 gross profit margin is about 16%, a slight increase from the previous month, and an expense ratio of about 12%, which is a decrease from the previous month. The cost reduction effect of parts procurement may be reflected from the second quarter.In the second quarter of the industry, the industry faced the National Five Clearance, and despite the poor market environment, it still achieved comprehensive improvement in bicycle indicators, reflecting the resilience and operational capabilities of the Great Wall transformation. The initial sales target is generally conservative, and profitability can still improve.The company lowered its maximum sales target to 1.07 million units, corresponding to 57 in the second half.60,000 vehicles are basically the same. Based on the expectation of gradual recovery of industry sales and the outstanding performance of the F series and Euler in the first half of the year, we believe that the sales target is relatively conservative.For the company, the improvement of profitability under the guarantee of the sales target may become the core, and a reasonable sales target is conducive to the gradual recovery of discounts.The sales target for 2019 is an increase of 1 from 2018.70,000 units. In the first half of the year, the F-series, Euler and M6 contributed an increase of 8 respectively.60,000 vehicles, 2.70,000, 2.30,000 vehicles, we expect the F series and Euler will continue to contribute 杭州夜生活网 the main increase in the second half, pickup truck sales have increased, M6 contribution will decline.Looking at the chain, the company has room for improvement in both price and volume. According to our current profit forecast, net profit for 2019 is 4.2 billion yuan, corresponding to a net profit of about 4,600 yuan in the second half of the year, an increase of 1,500 yuan over the first half. It is estimated and recommended that the profit forecasts for 2019 and 2020 remain unchanged. The Great Wall A / H neutral rating is maintained. Based on the company’s strong operating capability and the A-share sector estimate is moved upward, the Great Wall A target price is increased by 10.8% to 9.2 yuan (20 times P / E in 2019), maintaining Great Wall H target price of 6.2 Hong Kong dollars (12 times P / E in 2019), which has 11% and 9% upside compared with the current one. Risks New car sales were lower than expected, and discount recovery was lower than expected.