股

票

研 [Table_Title] Company Report: Great Wall Motor (02333 HK) Toliver Ma 马守彰

究 (852) 2509 5317 EquityResearch 公司报告： 长城汽车 (02333 HK) [email protected]

14 July 2020 [Table_Summary] Pickup Trucks Outperformed; SUVs Expected to Rebound 皮卡跑赢大市，SUV将反弹

 Upbeat pickup truck sales. Thanks to policy tailwinds, the pickup truck [Table_Rank] 公 market outperformed the overall auto market. Recently, Shanghai has Rating: Accumulate Maintained loosened up registration requirements for pickup trucks. We expect more 司 Report provinces and cities to partially or fully relax driving restrictions for pickup 评级： 收集 (维持) 报 trucks. Coupled with the launch of the new Great Wall Pao, GWM’s sales of 告 pickup trucks has thrived, representing nearly 50% market share in Jun. 2020. We expect that this will be the Company’s long-term growth driver as 6[Table_Price-18m TP目标价] : HK$7.40 Company pickup truck penetration in China is well below key international markets. Revised from 原目标价: HK$6.00

 SUVs to catch up in 2H20. GWM’s SUV sales lagged behind the market in Share price 股价: HK$6.650 1H20 due to a lack of new models and fading growth momentum from the F7. However, we expect GWM to come back in 2H20 with two new SUVs expected to be launched. One has already been unveiled to the market, the Stock performance Da Gou. We are more confident on this model than previous launches due to 股价表现 its more distinctive outlook and marketing approach. We expect less [Table_QuotePic] cannibalization effect for this model. 30.0 % of return

 The Company’s stock has attracted capital, especially from southbound 20.0

inflow, in which holdings through the HK-Shanghai connect increased to 10.0 证 32.6%. Our investment thesis remains unchanged; we like GWM’s growth

券 告 strategy. Its dominant position in the pickup truck market will be a long-term 0.0 growth engine due to China’s low pickup truck penetration rate. Meanwhile, (10.0) 研 报

the Company’s SUV segment is set for another growth trend upon the new

product launch in 2H20. Therefore, we maintain our investment rating as (20.0) 究 究 "Accumulate" and increase our TP to HK$7.40, representing 12.1x 2021 (30.0) 报 研 PER and 8.7x 2022 PER.

(40.0)

告  皮卡车销售乐观。由于政策的顺风，皮卡车市场的表现优于整体汽车市场。最近，上海放 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20

券

EquityResearch Report 宽了皮卡的注册要求。我们预计会有更多的省市部分或完全放宽对皮卡的驾驶限制。加上 HSI Index GREAT WALL MOT-H

证 新的长城炮的发布，长城汽车的皮卡销售蓬勃发展，在 2020 年 6 月获得近 50%的市场份 额。由于皮卡在中国的渗透率低于主要国际市场，我们预计这将是公司的长期增长动力。

[Tab

 SUV 将在 2020 年下半年反弹。由于缺乏新车型，以及 F7 的增长动力减弱，长城汽车的 Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y

SUV 销售在 2020 年上半年落后于市场。但是，我们预计长城汽车将在 2020 年下半年推 le_I 股价变动 1 个月 3 个月 1 年 出两款新 SUV 后反弹。 其中一款，命名为大狗，已经向市场公布。由于它具有更独特的 Abs. % 汽nfo1 22.0 33.0 17.7 外观以及营销方向有别于以前的车型，我们对该车型更有信心。我们预计此车型分流销售 绝对变动 % Rel. % to HS Index 车 的影响较小。 17.2 28.7 28.2 ] 相对恒指变动 % 及 Avg. Share price(HK$)  公司股票受南向资金追捧，其通过沪港通持股比例增加到 32.6%。我们的投资逻辑保持不 5.4 5.1 5.2 平均股价（港元） 零 变；我们认同长城汽车的增长策略。由于中国皮卡普及率低，其在皮卡市场的主导地位将 Source: Bloomberg, Guotai Junan International. 部 成为长期增长引擎。同时，随着 2020 年下半年新产品的发布，公司的 SUV 分部将出现另 件 一个增长趋势。 因此，我们维持投资评级为“收集”，目标价上调至 7.40 港元，相当于 12.1 倍 2021 年市盈率和 8.7 倍 2022 年市盈率。 行 业

Automobiles & Components Sector AutomobilesComponents & Y[Table_ear End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE [Tab 年结Profit ] 收入 股东净利 每股净利 每股净利变动 市盈率 每股净资产 市净率 每股股息 股息率 净资产收益率 le_I 12/31 (RMB m) (RMB m) (RMB) (△ %) (x) (RMB) (x) (RMB) (%) (%)

2018A 99,230 5,207 0.571 3.6 10.2 5.773 1.0 0.290 5.0 10.2 nfo2 2019A 96,211 4,497 0.493 (13.6) 12.1 5.960 1.0 0.250 4.2 8.4 中] 2020F 98,669 4,411 0.483 (1.9) 12.5 6.201 1.0 0.246 4.1 7.9 2021F 长外 120,497 5,065 0.555 14.8 10.9 6.478 0.9 0.282 4.7 8.7 2022F 141,214 6,472 0.709 27.8 8.5 6.832 0.9 0.360 6.0 10.7 城运 总股数 大股东 汽 [Table_BaseData]Shares in issue (m) (m) 9,176.6 Major shareholder Wei Jian Jun 34.9% 输 Market cap. (HK$ m) 市值 (HK$ m) Free float (%) 自由流通比率(%) 车 61,024.2 65.1 个月平均成交股数 净负债 股东资金 3 month average vol. 3 (‘000) 27,621.9 FY20 Net gearing (%) FY20 / (%) Net Cash

52 Weeks high/low (HK$) 52 周高/低 (HK$) 6.95/3.85 FY20 Est. NAV (HK$) FY20 每股估值（港元） 8.2

Source: the Company, Guotai Junan International. Great Wall MotorHK) Wall Great (02333

See the last page for disclaimer Page 1 of 8

[Table_PageHeader]Great Wall Motor (02333 HK)

POLICY FAVOURABLE TOWARDS PICKUP TRUCKS

] 1 r a M t h g i R _ e l b a T [

More provinces to relax driving restrictions for pickup trucks. A recent development has come from Shanghaiwhere license

registration requirements for pickup trucks has been relaxed. After these changes, pickup truck drivers can also register its plate

as "Shanghai C". The changes will make it easier to register pickup trucks, though the effect remains uncertain as driving 2020 restrictions within the city still applies. Shanghai, as one of the strictest cities with regards to vehicle control, will slowly relax

pickup truck restrictions, showing intentions of allowing more vehicles into the city. We believe it’s a meaningful first step. 14 July Chongqing, another municipality, fully opened up in May 2020. We believe the opening up for pickup trucks is trending in China and more will follow in the future.

Table-1: Developments in Relaxing Pickup Trucks Restriction Date Province and City Comment

The MIIT and NDRC jointly announced a pilot program on relaxing restrictions on Feb-16 Liaoning, Hebei, Henan and Yunnan pickup trucks entering the city in 4 provinces.

Dec-16 Xinjiang andHubei 2 provinces to join the pilot program.

Lifted restriction measures for pickup trucks as well as NEV light-duty trucks in

] 2 r a M t h g i R _ e l b a T [ Jun-19 Shandong-Jinan entering the city.

Sep-19 Hebei-Qinhuangdao Completely lifted restrictions on pickup trucks entering the city.

Allowed pickup trucks that weigh over 0.5 tons to enter its cities, with certain Dec-19 Hebei-Zhangjiakou conditions intact.

Except for the key polluted areas, Tangshan lifted the restrictions over pickup trucks

Jan-20 Hebei-Tangshan from entering the city.

Jan-20 Jilin Relaxed restrictions over pickup trucks entering the city. (02333 HK)

Relaxed the restrictions in Ningbo for pickup trucks with Zhejiang B plates or NEV

Jan-20 Zhejiang-Ningbo 长城汽车 trucks.

Apr-20 Jiangsu Optimized the control of pickup trucks entering the city. Great Wall Motor Apr-20 Jiangxi Completely lifted restrictions over pickup trucks from entering the city.

On 15th January, Chongqing launched 5 service reform measures to optimize the

May-20 Chongqing management of trucks. Further, the city relaxed driving restrictions on pickup trucks in

May.

May-20 Shaanxi Appropriately relaxed restrictions of pickup trucks from entering the city.

Jun-20 Shandong-Zibo Lifted traffic restrictions on pickup trucks.

Jul-20 Shanghai Relaxed license registration requirements for pickup trucks. Source: cnpickups.com, Guotai Junan International.

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See the last page for disclaimer Page 2 of 8 [Table_PageHeader]Great Wall Motor (02333 HK)

Great Wall Motors (GWM, the "Company") to thrive under policy tailwinds. As more cities have relaxed restrictions for

pickup trucks, sales performance has been quite strong in 2020. In Jun. 2020, pickup trucks] sales1 r a increasedM t h 74.5%g i R yoy_ e to 57,000l b a T [

units (See Figure-1). Sales continued to speed up since April, and has outperformed overall auto market sales (See Figure-2). In

terms of sales proportion within the auto market, we noticed an increasing trend as well, with sales proportion having increased

to 2.5% in Jun. 2020, a 0.7 ppt increase as compared to Dec. 2019 (See Figure-3). We believe that there is huge potential for 2020 increase as penetration rate is far behind other developed countries. According to IHS, sales of pickup trucks to overall vehicle

sales in the US/ UK/ Canada represented 16.5%/ 17.4%/ 19.4%, respectively. Therefore, with the help of supportive policies, we 14 July believe that the China pickup trucks market will continue to expand. It is the perfect time for GWM to launch its new pickup models, including the Great Wall Pao. Launched in Oct. 2019 and assembled in its Chongqing factory, the Company’s pickup trucks have been very strong, reaching sales of 15,003 units in June. Along with its Wingle series, pickup truck sales reached 26,680 units in June, becoming a very solid growth driver for the Company. Despite a rather small market, GWM has gained significant market share in the pickup trucks market, with sales representing 46.8% of total in the market, according to data from CAAM, and is still growing (See Figure-4). We expect market share to continue to grow as it would seem that demand is still very strong downstream.

Figure-1: Industry Pickup Truck Sales and Growth Figure-2: Industry Pickup Truck Sales vs. China Auto Sales Growth

] 2 r a M t h g i R _ e l b a T [

2018 2019 Units Pickup truck growth China auto growth 2020 2019 yoy 60,000 100% 2020 yoy 100.0% 80% 50,000 80.0% 60% 60.0% 40% 40,000 40.0% 20% 20.0% 30,000 0% 0.0%

-20% 20,000 -20.0%

-40%

Oct-18 Apr-19 Oct-19 Apr-20

Jun-19 Jun-20

-40.0% Jun-18

Feb-19 Feb-20

Dec-18 Dec-19 Aug-19 -60% Aug-18 10,000 -60.0% -80%

-80.0% (02333 HK) 0 -100% -100.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: CAAM, Guotai Junan International. Source: CAAM, Guotai Junan International. 长城汽车

Figure-3: Industry Pickup Trucks Sales Mix on China Auto Figure-4: GWM Pickup Trucks Sales on Industry Pickup Sales

3.0% 55.0% Great Wall Motor

50.0% 2.5% 45.0%

2.0% 40.0%

1.5% 35.0% 30.0% 1.0% 25.0%

0.5% 20.0%

Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20 Oct-17

Jun-17 Jun-18 Jun-19 Jun-20 Jun-17 Jun-19 Jun-20 Jun-18

Feb-19 Feb-20 Feb-18 Feb-19 Feb-20 Feb-18

Dec-17 Dec-18 Dec-19 Dec-17 Dec-18 Dec-19

Aug-18 Aug-19 Aug-17 Aug-18 Aug-19 Aug-17 Source: CAAM, Guotai Junan International. Source: the Company, Guotai Junan International.

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See the last page for disclaimer Page 3 of 8 [Table_PageHeader]Great Wall Motor (02333 HK)

SUVs to catch up in 2H20. Sales of SUVs was below market growth. Particularly, industry sales of SUVs was up yoy by 20.1%

and 10.5% in May and Jun. 2020, respectively, while, GWM’s SUVs only grew yoy by 13.6%] 1 andr a 0.2%M t yoy,h g respectively.i R _ e l Thisb isa T [

due to the lack of new models in the first half. GWM relied on the M6 and F7 only, but momentum of the F7 slowed. Also, there

seems to be no sign of improvement for its premium brand, the WEY. It is widely expected that two brand new SUVs will be rolled

out in 2H20. The two SUVs will be based on the all new modular platform. The first SUV, named as Da Gou (previously known as 2020 the B06), was unveiled in mid-Jun. 2020. There are two meaningful messages here. 1) The appearance is substantially different

from other Haval models, in which we believe is a big step forward as compared to previous new launches such as the F5/ M6, 14 July which is similar to the H6. Whether it can be another popular model is yet to be witnessed, but we believe that the cannibalization affect will be very limited. This was one of the key concerns for GWM as its product line is heavily skewed towards SUVs, making it hard to differentiate themselves with previous new models. Referencing to the initial success of the Great Wall Pao, we expect that it will be well-received by the market as well. 2) Another key message we noticed is from the shift in branding strategy. New model names did not apply the usual numbering of the Haval series, but a completely different name. The same for its new ORA car, which is named as Bai Mao, which is different from the previous numbering style. We expect that the new marketing strategy is aimed to target more younger consumers in which the 90s generation has become the key demographic segment for car purchases.

Figure-5: GWM Haval Da Gou Figure-6: GWM ORA Bai Mao

] 2 r a M t h g i R _ e l b a T [

(02333 HK)

Source: Autohome, Guotai Junan International. Source: the Company, Guotai Junan International.

长城汽车 Figure-7: GWM Sales Mix by Vehicle Type Figure-8: GWM Sales Volume and Growth

Pick-up Truck SUV (HAVAL) Sedan WEY ORA 2018 2019 units 100% 2020 2019 yoy 2020 yoy

90% 9.4% 8.5% 7.5% 6.6% 160,000 40% Great Wall Motor 80% 140,000 20% 70% 120,000 0% 60% 100,000 -20% 67.8% 71.5% 73.0% 50% 72.6% 80,000 40% -40% 60,000 30% -60% 40,000 20% 20,000 -80% 10% 18.0% 14.0% 15.8% 15.8% - -100%

0%

Jul Oct

2019 2020F 2021F 2022F Apr

Jun Jan

Feb Mar

Aug Sep Nov Dec May Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.

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See the last page for disclaimer Page 4 of 8 [Table_PageHeader]Great Wall Motor (02333 HK)

Table-2: Summary of Financial Forecasts 2018A 2019A 2020F 2021F 2022F

] 1 r a M t h g i R _ e l b a T [ Vehicle sales Pick-up truck 138,000 148,830 228,000 240,000 250,000 yoy 15.1% 7.8% 53.2% 5.3% 4.2%

SUV - Haval 766,062 769,454 743,800 906,600 1,048,600 yoy -18.4% 0.4% -3.3% 21.9% 15.7%

Sedan 5,976 3,106 2,000 2,000 2,000 2020 yoy -50.3% -48.0% -35.6% 0.0% 0.0% WEY 139,506 100,043 36,100 39,100 45,100 yoy 61.4% -28.3% -63.9% 8.3% 15.3% ORA 3,515 38,865 43,000 49,000 50,000 14 July yoy n.a. 1005.7% 10.6% 14.0% 2.0% Total 1,053,059 1,060,298 1,052,900 1,236,700 1,395,700 yoy -9.0% 0.7% -0.7% 17.5% 12.9% Financials (RMB mn) Revenue 99,230 96,211 98,669 120,497 141,214 yoy -1.9% -3.0% 2.6% 22.1% 17.2% Gross profit margin 17.9% 17.2% 17.3% 17.5% 17.7% yoy (ppts) -5.8% -4.0% 1.0% 1.0% 1.0% Profit from operations 6,232 4,777 4,639 5,599 6,452 yoy 6.5% -23.4% -2.9% 20.7% 15.2% Net income (Loss) 5,207 4,497 4,411 5,065 6,472 yoy 3.6% -13.6% -1.9% 14.8% 27.8% Basics EPS (RMB) 0.57 0.49 0.48 0.55 0.71 yoy 3.6% -13.6% -1.9% 14.8% 27.8% Source: the Company, Guotai Junan International.

] 2 r a M t h g i R _ e l b a T [ VALUATION

The Company’s stock price generated a 1-week relatively return of 19.1%. The return was just behind Geely Auto (00175 HK, "Accumulate"). The Company’s stock has attracted capital, especially from southbound inflows, in which holdings through the HK-Shanghai connect increased to 32.6%. Our investment thesis remains unchanged; we like GWM’s growth strategy. Its dominant position in the pickup truck market will be a long-term growth engine due to China’s low pickup truck penetration rate. Meanwhile, its SUV segment is set for another growth trend upon new product launches in 2H20. Therefore, we maintain our

investment rating as "Accumulate" and increase our TP to HK$7.40, representing 12.1x 2021 PER and 8.7x 2022 PER.

Figure-9: PER of GWM Figure-10: PER Range of GWM

Fo rward P/E Avg GWM (x) (x) (02333 HK) 15.0 +1 S.D. -1 S.D. 16.00 14.17 13.27 12.65 12.89 +2 S.D. -2 S.D. 14.00 12.19 13.0 11.64 10.54 11.01 12.00 9.52 9.54 11.0 9.90 10.00 10.14 7.67 10.29 长城汽车 9.27 8.84 8.00 8.13 7.84 8.01 9.0 7.02 6.99 6.00 7.63 5.87 6.90 6.94 7.0 4.00 6.25 5.54 5.85 5.97 2.00 4.46 4.61 5.0 4.27 4.00 0.00

3.0 Great Wall Motor

2011

2017

2012 2013 2015 2016 2018 2019 2010

2014

Jul-11

Jul-17

Jul-10 Jul-12 Jul-13 Jul-16 Jul-18 Jul-15 Jul-19

Jul-14

Jul-20

2020 YTD

Ma r- 11

Nov- 11

Ma r- 17

Ma r- 12 Ma r- 13 Ma r- 16 Ma r- 18 Ma r- 15 Ma r- 19

Ma r- 14

Nov-17

Nov-10 Nov-13 Nov-15 Nov-18 Nov-19 Nov- 12 Nov- 16 Nov-14 Ma r-20 Source: Bloomberg, Guotai Junan International. Source: Bloomberg, Guotai Junan International.

Figure-11: Shareholdings in GWM H-Shares from Southbound Funds

Shareholdings Composition on H-Shares (RHS) Billions 1.02 33 1.00 32 0.98 0.96 31 0.94 30 0.92

0.90 29

0.88 28

0.86

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0.84 27

Company

2020-04-16 2020-04-28 2020-05-05 2020-05-09 2020-05-14 2020-05-19 2020-05-30 2020-06-04 2020-06-09 2020-06-13 2020-06-18 2020-07-02 2020-07-07 2020-07-11 2020-04-18 2020-04-21 2020-04-23 2020-04-25 2020-05-02 2020-05-07 2020-05-12 2020-05-16 2020-05-21 2020-05-23 2020-05-26 2020-05-28 2020-06-02 2020-06-06 2020-06-11 2020-06-16 2020-06-20 2020-06-23 2020-06-26 2020-06-29 2020-07-04 2020-07-09 2020-04-14 Source: WIND, Guotai Junan International. See the last page for disclaimer Page 5 of 8 [Table_PageHeader]Great Wall Motor (02333 HK)

Table-3: Peers Comparison Last price PE PB ROE(%) D/Y(%) EV/EBITDA

] 1 r a M t h g i R _ e l b a T [ 19A 20F 21F 22F 19A 20F 21F 22F 20F 20F 20F Company Stock Code Currency Dongfeng Motor-H 489 HK HKD 5.15 3.0 3.6 3.1 3.0 0.3 0.3 0.3 0.3 9.1 7.1 15.8

18.10 17.7 18.6 15.0 13.4 2.9 2.5 2.2 1.9 15.1 1.7 9.7 Geely Automobile 175 HK HKD

Brilliance China 1114 HK HKD 8.12 5.3 5.4 4.6 4.9 1.1 1.0 0.8 0.7 19.5 4.5 n.a.

Great Wall Mot-H 2333 HK HKD 6.65 12.0 14.1 10.8 9.8 1.0 1.0 0.9 0.9 8.8 4.1 7.2 2020

Qingling Motor-H 1122 HK HKD 1.43 9.0 n.a. n.a. n.a. 0.4 n.a. n.a. n.a. n.a. n.a. n.a.

82.55 145.5 74.3 64.9 51.5 3.8 3.5 3.3 3.1 5.2 0.2 17.2

Byd Co Ltd-H 1211 HK HKD 14 July

Guangzhou Auto-H 2238 HK HKD 6.52 8.8 8.3 6.6 5.8 0.7 0.7 0.7 0.6 10.2 4.6 20.5

Baic Motor-H 1958 HK HKD 3.80 6.7 8.3 6.3 5.4 0.6 0.5 0.5 0.5 8.1 5.1 0.7

Weichai Power-H 2338 HK HKD 17.24 13.2 12.8 11.3 10.6 2.7 2.4 2.1 1.8 19.1 3.0 5.7

Sinotruk Hk Ltd 3808 HK HKD 22.20 16.2 12.0 11.5 11.1 2.0 1.8 1.6 1.5 15.0 3.2 4.2

Simple Average 23.8 17.5 14.9 12.8 1.6 1.5 1.4 1.2 12.2 3.7 10.1 Weighted Average 49.8 29.8 25.7 21.3 2.4 2.1 2.0 1.8 11.4 2.6 11.3

Dongfeng Auto-A 600006 CH CNY 4.5 20.3 16.1 16.7 n.a. 1.2 n.a. n.a. n.a. n.a. n.a. n.a.

Great Wall Mo-A 601633 CH CNY 10.5 21.5 22.5 17.3 15.9 1.8 1.7 1.6 1.5 9.2 2.2 7.1

Faw Car Co Ltd-A 000800 CH CNY 14.9 460.2 n.a. n.a. n.a. 0.9 2.5 2.7 2.5 4.7 n.a. n.a.

Saic Motor-A 600104 CH CNY 20.16 9.2 10.6 8.6 7.9 0.9 0.9 0.8 0.8 9.9 4.8 6.6

Chongqing Chan-A 000625 CH CNY 13.19 n.a. 17.7 14.9 12.9 1.4 1.3 1.2 1.1 8.0 1.2 5.6

Weichai Power-A 000338 CH CNY 16.24 14.1 13.2 11.8 11.1 2.8 2.4 2.1 1.9 18.6 2.9 5.1 ] 2 r a M t h g i R _ e l b a T [

Beiqi Foton-A 600166 CH CNY 2.02 69.4 n.a. n.a. n.a. 0.9 n.a. n.a. n.a. n.a. n.a. n.a.

Anhui Jianghua-A 600418 CH CNY 11.24 187.3 63.5 38.1 27.2 1.6 1.6 1.5 1.4 3.2 1.1 7.5

Cnhtc Jinan T-A 000951 CH CNY 35.65 19.6 16.8 15.5 14.1 3.4 3.0 2.9 2.6 16.3 1.8 n.a.

Zhengzhou Yut-A 600066 CH CNY 14.03 16.0 15.6 13.8 12.9 1.9 1.8 1.7 1.6 10.7 4.5 9.4

Xiamen King Lo-A 600686 CH CNY 6.32 26.3 n.a. n.a. n.a. 1.1 n.a. n.a. n.a. n.a. n.a. n.a.

Jiangling Moto-A 000550 CH CNY 15.45 90.2 42.1 33.8 27.1 1.3 1.2 1.2 1.2 3.4 1.6 0.7

Yangzhou Yax-A 600213 CH CNY 7.67 127.8 n.a. n.a. n.a. 9.7 n.a. n.a. n.a. n.a. n.a. n.a.

Zhongtong Bus-A 000957 CH CNY 7.49 134.2 21.4 n.a. n.a. 1.6 n.a. n.a. n.a. n.a. n.a. n.a.

Simple Average 88.5 24.2 18.9 0.0 2.2 1.8 1.7 0.0 9.3 2.5 6.0 Weighted Average 94.7 16.3 13.0 11.2 2.0 1.9 1.8 1.7 10.5 1.9 4.5

Nissan Motor Co 7201 JP JPY 390.30 4.8 n.a. n.a. 11.6 0.3 0.4 0.4 0.4 (10.0) 2.7 3.8

(02333 HK)

Toyota Motor 7203 JP JPY 6,744.00 10.4 9.2 16.7 10.3 1.0 0.9 0.9 0.9 6.0 2.8 14.8

Honda Motor Co 7267 JP JPY 2,758.50 8.0 10.6 15.6 8.8 0.6 0.6 0.6 0.6 3.7 3.2 11.1

Mazda Motor 7261 JP JPY 672.00 6.7 34.9 n.a. 43.4 0.3 0.4 0.4 0.4 (7.0) 2.8 35.1

Mitsubishi Heavy 7011 JT JPY 2,581.00 8.5 10.0 88.0 14.1 0.6 0.7 0.7 0.7 1.8 3.4 9.1 长城汽车

Fuji Heavy Indus 7270 JP JPY 2,220.00 11.5 11.2 20.1 11.2 1.1 1.0 1.0 1.0 4.3 3.5 4.5

Suzuki Motor 7269 JP JPY 3,795.00 9.6 13.3 24.3 13.9 1.3 1.2 1.2 1.1 4.8 1.6 7.6

Hino Motors Ltd 7205 JP JPY 722.00 7.5 13.2 245.4 15.4 0.8 0.8 0.8 0.7 0.1 1.2 8.8

Isuzu Motors 7202 JP JPY 972.50 6.5 8.8 21.3 10.0 0.8 0.8 0.7 0.7 4.2 2.4 7.3

Simple Average 8.2 13.9 61.6 15.4 0.7 0.7 0.7 0.7 0.9 2.6 11.3 Great Wall Motor Weighted Average 9.6 9.6 20.8 10.9 0.9 0.9 0.8 0.8 4.4 2.9 12.8

Hyundai Motor 005380 KS KRW 101,500.00 9.0 10.5 6.3 5.6 0.3 0.4 0.4 0.3 5.4 4.2 9.4

Ford Motor Co F US USD 6.06 606.0 n.a. 14.1 7.2 0.7 0.9 1.0 0.9 4.6 1.8 3.1

Navistar Intl NAV US USD 28.03 12.6 n.a. 18.6 10.3 n.a. n.a. n.a. n.a. (4.0) 0.0 9.4

Paccar Inc PCAR US USD 75.64 11.0 26.8 17.4 13.1 2.7 2.7 2.6 2.5 15.6 2.5 12.0

Volkswagen Ag VOW GR EUR 144.50 5.4 16.9 6.9 5.5 0.7 0.6 0.6 0.5 8.2 3.7 2.5

Bayer Motoren Wk BMW GR EUR 57.86 7.7 15.5 8.5 7.0 0.6 0.6 0.6 0.6 7.2 4.0 7.9

Daimler Ag DAI GR EUR 36.61 16.5 69.3 10.1 6.7 0.6 0.6 0.6 0.6 6.1 3.1 0.9

Man Se MAN GR EUR 47.50 9.8 n.a. n.a. n.a. 1.2 n.a. n.a. n.a. n.a. n.a. n.a.

Renault Sa RNO FP EUR 22.30 n.a. n.a. 9.7 3.5 0.2 0.2 0.2 0.2 2.3 2.7 2.4

Volvo Ab-B VOLVB SS SEK 157.15 8.9 28.6 15.1 12.1 2.3 2.2 2.1 1.9 13.7 4.8 6.8

General Motors C GM US USD 19.10 5.5 22.9 10.9 6.2 4.0 8.3 5.9 10.7 209.7 0.0 9.7

Tata Steel Ltd TATA IN INR 335.20 3.8 24.7 n.a. 8.0 0.6 0.5 0.6 0.5 (2.2) 2.6 9.9 Simple Average 58.2 26.9 11.2 7.4 1.2 1.6 1.4 1.8 22.8 2.8 6.3

Weighted Average 54.8 23.0 9.8 7.2 1.0 1.0 0.9 0.9 8.8 3.4 4.8

Global Simple Average 44.7 22.9 15.0 6.8 1.7 1.6 1.5 1.0 14.8 3.0 7.5 Report

Global Weighted 39.6 18.3 16.7 11.1 1.2 1.2 1.1 1.1 7.6 2.9 8.9 Source:Average the Company, Guotai Junan International.

Company

See the last page for disclaimer Page 6 of 8 [Table_PageHeader]Great Wall Motor (02333 HK)

Financial Statements and Ratios [Table_IncomeStatement] [Table_BalanceSheet] Income Statement Balance Sheet

] 1 r a M t h g i R _ e l b a T [

Year end 31 Dec (RMB m) 2018A 2019A 2020F 2021F 2022F Year end 31 Dec (RMB m) 2018A 2019A 2020F 2021F 2022F Total Revenue 99,230 96,211 98,669 120,497 141,214 PPE 28,994 29,743 30,650 30,107 29,618 Cost of sales (81,481) (79,684) (81,551) (99,383) (116,222) Construction in progress 4,406 2,247 3,401 4,209 5,017 Gross profit 17,749 16,526 17,118 21,114 24,991 Intangible Assets 3,391 4,710 3,195 3,228 3,247

Deferred tax assets 677 684 708 744 744 2020 Business tax and surcharges (3,627) (3,169) (3,250) (3,968) (4,651) Investments 261 3,513 3,258 3,048 2,883 Selling expenses (4,575) (3,897) (3,917) (4,618) (5,579) Other 7,946 3,697 3,331 4,044 4,358

Administrative expenses (3,420) (4,672) (4,870) (6,543) (7,829) Total Non-current Assets 45,674 44,594 44,545 45,379 45,865 14 July Financial expenses/incomes 123 30 (161) (187) (171) Impairment loss on assets (137) (504) (473) (527) (571) Cash & Cash Equivalents 7,682 9,723 4,232 8,677 10,475 Gains/(losses) from changes in (140) (73) (107) (90) (98) Inventories 4,445 6,237 5,240 6,524 7,549 fair value Trade and other Receivables 35,227 34,639 39,086 45,742 54,773 Investment income 259 535 297 418 360 Prepayments 441 441 442 442 442 Operating Profit 6,232 4,777 4,639 5,599 6,452 Others 18,331 17,462 18,771 20,212 21,797 Total Current Assets 66,126 68,502 67,771 81,597 95,037 Non-operating income 253 342 309 231 95 Non-operating expenses (8) (18) (19) (23) (27) Total Assets 111,800 113,096 112,316 126,976 140,902 Profit Before Tax 6,477 5,101 4,929 5,806 6,521 Income Tax (1,229) (570) (484) (703) 0 Trade payables 32,318 37,942 34,709 43,056 49,908 profit After Tax 5,248 4,531 4,444 5,103 6,521 Advances from customers 0 0 0 0 0 Tax payables 2,551 1,512 1,191 1,151 1,355 Non-controlling Interest (40) (34) (33) (38) (49) Salaries payables 2,061 2,094 2,148 2,623 3,074 Shareholders' Profit / Loss 5,207 4,497 4,411 5,065 6,472 Short Term Borrowing 12,800 1,180 1,180 1,180 1,180 Other current liabilities 4,888 11,871 12,175 14,868 17,424 Basic EPS 0.571 0.493 0.483 0.555 0.709 Total Current Liabilities 54,618 54,600 51,402 62,878 72,942

] 2 r a M t h g i R _ e l b a T [ Dividend per share (RMB) 0.290 0.250 0.246 0.282 0.360 Deferred income 2,083 2,193 2,249 2,747 3,219 Total Non-current Liabilities 4,493 4,097 4,312 4,968 5,599

[Table_CashFlowStatement] Cash Flow Statement Total Liabilities 59,112 58,697 55,714 67,846 78,541

Year end 31 Dec (RMB m) 2018A 2019A 2020F 2021F 2022F Total Shareholders' Equity 52,525 54,399 56,568 59,059 62,241 EBT 5,248 4,531 4,444 5,103 6,521 Minority Interest 164 0 33 71 120 Depreciation & Amortization 3,795 4,331 3,157 3,137 3,086 Total Equity 52,689 54,399 56,601 59,130 62,361 BPS(RMB) 5.773 5.960 6.201 6.478 6.832 Adjustments from other G/L (58) (43) 11 14 12 Investment losses/(gains) (219) (214) (17) (19) (21) Changes in working capital 9,625 4,541 (6,687) 377 (3,234) Financial Ratios Change in deferred tax assets 272 (135) 32 462 472 and liabilities 2018A 2019A 2020F 2021F 2022F Finance costs paid 577 335 161 187 171 Profitability Analysis

Other adjustment 0 0 (1,274) 1,687 1,627 Gross profit margin(%) 17.89 17.18 17.35 17.52 17.70 (02333 HK)

Cash from Operating Activities 19,698 13,972 299 11,477 9,206 EBITDAR(%) 8.74 7.76 8.12 7.39 6.85

OP margin(%) 6.28 4.96 4.70 4.65 4.57 Acquisition of PPE (6,662) (6,940) (5,000) (3,500) (3,500) Net profit margin(%) 5.25 4.67 4.49 4.21 4.58 Proceeds from sale of PPE 416 155 212 261 209 ROE(%) 10.2 8.4 7.8 8.7 10.7 Net change on available-for-sale (4,018) (3,663) 255 210 166 ROA(%) 4.68 4.00 3.85 4.24 4.84 长城汽车 financial assets Net received/(Paid) from Growth Analysis subsidiaries and other business 69 (4,818) (1,583) (2,111) (2,837) Rev growth(%) -1.92 -3.04 -0.33 24.64 18.10 entities OP growth(%) 6.45 -23.35 -5.72 23.30 16.14 Others 155 (535) 2,516 707 1,878 Net profit growth (%) 3.58 -13.64 -4.24 16.82 28.60 Cash from Investing Activities (10,040) (15,802) (3,601) (4,433) (4,084) EPS(%) 3.58 -13.64 -4.24 16.82 28.60

BPS(%) 6.96 3.25 3.95 4.44 5.47

Share Issuance 0 0 0 0 0 Great Wall Motor

Net change in borrowings (4,378) 6,754 159 159 159 Liquidity and solvency Dividends paid (2,042) (2,830) (2,242) (2,575) (3,290) Gearing ratio(%) 3.68 Net Cash Net Cash Net Cash Net Cash Others (80) 20 (161) (187) (171) Cash ratio 0.143.68 0.18 0.08 0.14 0.14 Cash from Financing Activities (6,501) 3,944 (2,245) (2,603) (3,302) Quick ratio 1.13 1.14 1.22 1.20 1.20

Free cash at the beginning of the 3,827 6,597 8,760 3,214 7,655 year Efficiency Analysis Net Changes in Cash 3,157 2,115 (5,546) 4,441 1,820 Inventory turnover days 22 24 23 24 24 Other adjustment (386) 48 0 0 0 Receivable turnover days 157 133 145 139 142 Free cash at the end of the year 6,597 8,760 3,214 7,655 9,474 Payable turnover days 137 147 150 129 133

Cash at Beg of Year 4,831 7,682 9,723 4,232 8,677 Restricted cash and bank 1,085 963 1,018 1,022 1,001 balance Cash at End of Year 7,682 9,723 4,232 8,677 10,475

Source: the Company, Guotai Junan International.

Report

Company

See the last page for disclaimer Page 7 of 8 [Table_PageHeader]Great Wall Motor (02333 HK)

Company[Table_CompanyRatingDefinition] Rating Definition

The Benchmark: Hong Kong Hang Seng Index ] 1 r a M t h g i R _ e l b a T [

Time Horizon: 6 to 18 months

Rating Definition

Buy 买入 Relative Performance>15%;

or the fundamental outlook of the company or sector is favorable. 2020 Accumulate 收集 Relative Performance is 5% to 15%;

or the fundamental outlook of the company or sector is favorable. 14 July Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral. Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable.

Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable.

Sector[Table_ RatingIndustry DefinitionRatingDefinition] The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Outperform 跑赢大市 Relative Performance>5%;

] 2 r a M t h g i R _ e l b a T [ or the fundamental outlook of the sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform 跑输大市 Relative Performance<-5%; Or the fundamental outlook of the sector is unfavorable.

[DISCLOSURETable_DISCLOSUREOFINTERESTS OF INTERESTS ]

(1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for GUOTAI JUNAN I (01788 HK),JINSHANG BANK (02558 HK),ZHONGLIANG HLDG (02772 HK),BINHAI INVESTMENT (02886 HK),HAITIAN ANTENNA (08227 HK),Guotai Junan and its group companies do not hold equal to or more than 1% of the market

capitalization of the issuer mentioned in this Research Report. (02333 HK)

(4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months. (5) Guotai Junan and its group companies are making, or will make a market in the securities in respect of GEELY AUTO (00175 HK) mentioned in this Research Report. (6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research 长城汽车 Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies.

DISCLAIMER Great Wall Motor

This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily).

Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan.

Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision.

This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject

Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction.

© 2020 Guotai Junan Securities (Hong Kong) Limited. All Rights Reserved. Report

27/F., Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong. Tel.: (852) 2509-9118 Fax: (852) 2509-7793 Website: www.gtja.com.hk

Company

See the last page for disclaimer Page 8 of 8