Great Wall Earnings: Exports Boost Bottom Line; Raising Fair Value 9%, but Shares Are Fairly Valued
No-moat Great Wall Motor, or GWM, reported in-line revenue for the second quarter but net profit beat our expectation. We attribute the 2-time year-over-year net profit growth to the company’s 51% surge in export sales in the quarter, which helped lift unit revenue and mitigate margin pressure from price competition in the domestic market. We raise our fair value estimate to HKD 11.80 from HKD 10.80, which implies a 2025 forward price/earnings ratio of 7 times. At the current price level, GWM’s H-shares remain fairly valued in 3-star territory.
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