股 票 研 [Table_Title] Company Report: Great Wall Motor (02333 HK) Toliver Ma 马守彰 究 (852) 2509 5317 Equity Research 公司报告： 长城汽车 (02333 HK) [email protected] 27 August 2019 [Table_Summary] Lack of Growth Catalyst and Margin Concerns, Maintain "Sell" 缺乏增长催化剂及利润率令人担忧，维持“卖出” GWM’s 1H19 net profit decreased 58.9% yoy to RMB1,517 million, 公 Rating:[Table_Rank ] Sell consistent with preliminary results but below our expectations. The Maintained 司 worse-than-expected results were mainly dragged by weak auto sales and decrease in gross margin. In 1H19, sales volume decreased 2.5% yoy to 报 评级： 卖出 (维持) 460,269 units. ASP was down 13.8% yoy on more sales towards NEV and 告 export sales. As a result, gross margin was down by 5.2 ppts to 15.9% yoy in 1H19. 6[Table_Price-18m TP目标价] : HK$3.65 Company Report Revised from 原目标价: HK$4.00 We have revised downwards net profit forecasts for 2019 to 2021 by 20.0%/ 16.6%/ 14.9%, respectively. We have reduced our sales expectation Share price 股价: HK$4.930 on Haval, WEY and ORA brands based on the current run rate. We have also lowered our gross margin assumptions by 1.8 ppts in 2019 to 2021, respectively. Gross margin should continue to be under pressure as Stock performance competition remains fierce and new factory commencements will increase 股价表现 fixed costs. GWM should also maintain its competitive pricing policy to [Table_QuotePic60.0 % of return] defend market share. 50.0 40.0 1H19 results reveal mostly negative surprises, with both ASP and gross 证 margin having dropped more than expected. This is alarming as 1) sales mix 30.0 券 告 supposedly improved in 1H19 with more Haval F7 sales, but ASP dropped 20.0 and 2) costs are difficult to cut down as advertising and R&D expenses are 10.0 研 报 deemed to be necessary to market its multiple brand strategy. Moreover, the 0.0 model pipeline is relatively weak, with 4 new models to be expected by 2020. 究 究 (10.0) We maintain our investment rating as "Sell" and reduce TP to HK$3.65. 报 (20.0) 研 TP represents 7.3x 2019 PER and 7.0x 2020 PER. Aug-18 Nov-18 Feb-19 May-19 Aug-19 告 HSI Index GREAT WALL MOT-H 券 长城汽车 2019 年上半年净利润同比下降 58.9%至人民币 1,517 百万元，与业绩快报一致， Equity Research Report 但低于我们的预期。 差于预期的业绩主要是受到汽车销售疲弱和毛利率下降所拖累。 证 2019 年上半年，销量同比下降 2.5%至 460,269 辆。 由于新能源汽车和出口销售增加， [Table_PriceChange] 平均售价同比下跌 ％。因此， 年上半年毛利率同比下降 个百分点至 。 Change in Share Price 1 M 3 M 1 Y 13.8 2019 5.2 15.9% [Tab 股价变动 个月 个月 年 1 3 1 我们将 2019 年至 2021 年的净利润预测分别下调 20.0%/ 16.6%/ 14.9%。 我们根据当前 Abs. % (10.4) (8.7) 0.4 le_I 的销售速度下调了对哈弗、WEY 和欧拉品牌的销售预期。我们还将 2019 年至 2021 年的 绝对变动 % Rel. % to HS Index 毛利率假设分别下调 1.8 个百分点。由于竞争仍然激烈和新工厂投产将增加固定成本，毛 (0.8) (2.8) 9.6 汽nfo1 相对恒指变动 % 利率应继续承受压力。长城汽车还应保持其有竞争力的定价政策，以捍卫市场份额。 Avg. Share price(HK$) 车 5.0 5.5 5.1 ] 平均股价（港元） 2019 年上半年业绩显示较多的负面因素，其中平均销售价格和毛利率的下降幅度均超过 及 Source: Bloomberg, Guotai Junan International. 零 我们的预期。我们认为这是令人担忧的，因为 1）销售组合在 2019 年上半年是有所改善， 哈佛 F7 的销售有所增加，但平均售价反而下跌；及 2）成本难以削减，是由于为发展多 部 品牌战略，广告和研发费用被公司视为必须的。此外，车型周期相对较弱，预计到 2020 件 年将只有 4 个新车型。我们维持投资评级为“卖出”，将目标价下调至 3.65 港元。目标价 行 相当于 7.3 倍 2019 年市盈率和 7.0 倍 2020 年市盈率。 业 Automobiles & Components Sector Automobiles & Components 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) (%) (%) 2017A 101,169 5,027 0.551 (52.3) 7.4 5.397 0.8 0.170 4.1 10.4 nfo2 2018A 99,230 5,207 0.571 3.6 7.6 5.773 0.7 0.290 6.7 10.2 中] 2019F 97,405 4,024 0.441 (22.8) 9.8 6.037 0.7 0.180 4.2 7.5 2020F 103,611 4,200 0.460 4.3 9.4 6.290 0.7 0.211 4.9 7.5 长外 2021F 106,495 4,351 0.477 3.7 9.1 6.563 0.7 0.207 4.8 7.4 城运 总股数 9,127.3 大股东 汽 [Table_BaseData]Shares in issue (m) (m) Major shareholder Wei Jian Jun 34.9% 输 Market cap. (HK$ m) 市值 (HK$ m) 44,997.6 Free float (%) 自由流通比率(%) 车 65.1 个月平均成交股数 净负债 股东资金 3 month average vol. 3 (‘000) 25,628.2 FY19 Net gearing (%) FY19 / (%) Net Cash 52 Weeks high/low (HK$) 52 周高/低 (HK$) 7.260 / 3.960 FY19 Est. NAV (HK$) FY19 每股估值（港元） 13.1 Source: the Company, Guotai Junan International. Great Wall MotorGreat Wall HK) (02333 See the last page for disclaimer Page 1 of 8 [Table_PageHeader]Great Wall Motor (02333 HK) 1H19 RESULTS REVIEW ] 1 r a M t h g i R _ e l b a T [ Great Wall Motor’s ("GWM" or the "Company") 1H19 net profit decreased 58.9% yoy to RMB1,517 million, consistent with preliminary results, but below our expectations. The worse-than-expected results were mainly dragged by weak auto sales and decrease in gross margin. Key takeaways are as follows: In 1H19, sales volume decreased 2.5% yoy to 460,269 units. The disclosed sales volume is inconsistent with the monthly sales data due to more stringent accounting recognition policy. The difference was mainly due to sales made to 27 August 2019 ride-hailing and export companies, of which ownership tittle is not fully transferred. ASP significantly decreased by 13.8% yoy in 1H19. The significant decrease was mainly due to more sales towards the ORA brand, which is priced relatively cheaper than the overall Haval series. Moreover, export sales will also be priced slightly lower to increase competitiveness. Gross margin reduced 5.2 ppts to 15.9% yoy. During the period, the Company increased quick sales and promotional discounts due to a generally weak auto environment with early implementation of China 6 emission standards. Administrative expense increased 24.3% yoy and R&D expenses increased by 8.9% yoy in 1H19. Administrative expense was mainly driven by the increased depreciation and amortization expense and] consultation2 r a M t feeh g s. i R _ e l b a T [ Selling expense per revenue ratio was down by 0.7 ppts yoy. The decrease was mainly due to changes in classification of transportation expenses. On the other hand, advertising expense increased significantly by 37.7% yoy as to promote its multi-branding strategy. Similar to the prior period, no interim dividend was announced for 1H19. Table-1: Summary of 2018 Financial Results of GWM (in RMB mn, except per share item) 1H19 1H18 yoy 2Q19 2Q18 1Q19 yoy QoQ Key financials Total Revenue 41,377 48,678 (15.0%) 18,749 22,106 22,627 (15.2%) (17.1%) (02333 HK) Operating income 40,317 47,958 (15.9%) 18,231 21,729 22,085 (16.1%) (17.5%) Interest income 988 712 38.9% 501 370 487 35.6% 2.9% Fee and commission income 71 9 682.5% 17 0 55 #DIV/0! (69.7%) Cost of sales 34,813 38,415 (9.4%) 15,750 17,547 19,063 (10.2%) (17.4%) Gross profit 6,563 10,264 (36.1%) 2,999 4,559 3,564 (34.2%) (15.9%) 长城汽车 Business tax and surcharges 1,336 1,787 (25.2%) 619 786 717 (21.3%) (13.6%) Selling expenses 1,470 2,077 (29.2%) 427 907 1,043 (53.0%) (59.1%) Administrative expenses 841 677 24.3% 437 52 404 746.5% 8.2% R&D expenses 918 843 8.9% 0 0 426 #DIV/0! (100.0%) Finance expenses / (income) 243 454 (46.4%) 145 240 98 (39.6%) 47.9% Operating profit 1,779 4,355 (59.1%) 983 2,612 937 (62.4%) 5.0% Non-operating income 137 82 67.4% 96 52 41 84.5% 131.1% Non-operating expenses 12 3 361.0% 10 1 1 690.4% 663.4% Great Wall Motor Profit before taxation 1,905 4,434 (57.0%) 928 1,859 977 (50.1%) (5.0%) Income tax expenses 354 718 (50.7%) 170 229 184 (25.8%) (7.5%) Net profits 1,551 3,717 (58.3%) 758 1,630 793 (53.5%) (4.4%) Net profit attributable to parent 1,517 3,696 (58.9%) 744 1,615 773 (53.9%) (3.8%) Minority interest 34 21 63.3% 14 15 20 (4.4%) (28.5%) Basic EPS (RMB) 0.17 0.40 (58.9%) 0.08 0.18 0.08 (53.9%) (3.8%) Operating Data Sales volume(unit) 460,269 471,939 (2.5%) 176,427 214,892 283,842 (17.9%) (37.8%) Domestic Sales 434,319 449,716 (3.4%) 163,092 201,959 271,227 (19.2%) (39.9%) Export 25,950 22,223 16.8% 13,335 12,933 12,615 3.1% 5.7% ASP(RMB) 87,594.27 101,618.69 (13.8%) 103,337.22 101,116.15 77,808.96 2.2% 32.8% Margins and ratios (%) ppt ppt ppt Gross profit margin(%) 15.9% 21.1% (5.2) 16.0% 20.6% 15.8% (4.6) 0.2 OP Margin(%) 4.3% 8.9% (4.6) 5.2% 11.8% 4.1% (6.6) 1.1 Net profit margin(%) 3.7% 7.6% (3.9) 4.0% 7.3% 3.4% (3.3) 0.6 Selling costs to revenue 3.6% 4.3% (0.7) 2.3% 4.1% 4.6% (1.8) (2.3) Admin costs to revenue 2.0% 1.4% 0.6 2.3% 0.2% 1.8% 2.1 0.5 Effective tax rate 18.6% 16.2% 2.4 18.3% 12.3% 18.8% 6.0 (0.5) Source: the Company, Guotai Junan International.