GREAT WALL MOTOR COMPANY LIMITED(601633)：PROMISING FUTURE OF EV TRANSFORMATION WITH MAJOR INCREMENT FROM HAVAL

Promising future for renewables industry in 2023 with explosive growth of hybrid electric vehicles. 1) Scale: under the assumption of stable domestic economic growth and supportive auto-related policies, we forecast the wholesale/retail sales of domestic EV to be 9.68mn (+51% YoY)/8.04mn (+54% YoY), corresponding to a penetration rate of 40%. Subsectors (under PTI methods): we estimate EV sales to be 4.7mn (+19.9% YoY), PHEV sales to be 2.67mn (+159.2% YoY), and EREV sales to be 0.67mn (+139.3% YoY). 2) Structure: “2 superpower and multi-weak power” is likely to transition into “2 superpower and multi-great power”. We expect market share of the top 9 domestic EV enterprises to reach 77% in 2023 (vs. 62% in 2022), while the market share of CR2 (Tesla and BYD) should remain stable with a slight decrease to 38%-39%, and the market share of other companies, including LI, GWM, Geely, and CAHNGAN, continues to rise.
Great Wall Motor: frequent launch of new vehicles & revolution of channel constitute marginal improvements. 1) History review: strong sales of Haval H6 led the market share increase of entire Haval series, driving the latest upward trend of GWM's stock price. 2) Competitiveness: GWM sticks to the core strategy of integrating higher technical and product power in the long run. The latest cycle reflects the combination of self-innovated full-stack engine technology and precisely positioned SUV products towards customer demands. We expect the battery, motor and electric control system with independent & controllable hybrid technology and new products of Haval series with self-operated channel to lead the next cycle. 3) Core catalysts: we expect mature technology, channels revolution and new products to bring solid growth. Technology: developed relatively early, Lemon DHT led the industry development regarding its mature technology and excellent performance of fuel consumption parameters. Product: among GWM's six brands, one is transforming, two is stabilizing, and the other three are making a breakthrough. Havel is targeting large volumes to accelerate EV transformation. GWM plans to launch PHEV/EV products in 2Q23, enhancing its market share in the price range of Rmb100,000-200,000. Tank and Pick-ups enjoy a stable leadership in the market segment while Ora/Saloon/WEY are about to launch new vehicles from 2Q23, covering sedan/MPV & other differentiated categories and accelerating EV transformation. Channel: in addition to the existing offline channel of Ora/Saloon/WEY, GWM is about to set up a new EV sales channel system. Open of new stores with launch of new products from 2Q23 are likely to accelerate EV transformation for GWM.
Earnings Forecast & Rating: We estimate the company's 2022-2024 revenue to be Rmb137.4/202.6/274.2bn, and net profit to be Rmb8.3/5.9/10bn (YoY growth of +23.1%/- 28.6%/+69.3%), corresponding to EPS of Rmb0.95/0.68/1.15 and P/E at 34x/48x/28x (peers average of 21x/16x/14x). We maintain the Buy rating.
Risks: Lower-than-expected demand recovery, stronger-than-expected price competition.
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   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。