x Country 12 February 2020 Great Wall Motor (2333 HK) Share price (12 Feb): HKD5.67 12-mth rating: Outperform (2) Consumer Discretionary: China Softness in January sales MEMO Kelvin Lau Summary: Great Wall Motor (GWM) registered a volume decline of 28% YoY to 80k (852) 2848 4467 units in January, after declines of 21% in December and 13% in November. This was [email protected] especially due to weakness in the SUV segment (-32% YoY) and sedan segment (-56%) despite strong growth for pick-ups (+17%). We think the sales weakness was due to the earlier Lunar New Year holiday in 2020 (25 January vs. 5 February in 2019). We are cautious on GWM’s February sales number amid the current coronavirus outbreak. Analysis Haval brand sales fell significantly– In January, the total sales volume for the Haval brand fell significantly by 32% YoY, to 59k units, after declines of 27% in December and 22% in November. While sales for the key model M6 remained solid at 14,291 units (+18% YoY), F7 and H6 showed softness at 10,193 units (-32% YoY) and 26,414 units (-41% YoY) respectively. Further, sales for H2, H4, and F5 declined by 60%, 19% and 68% YoY, respectively to 2011, 1294 and 1630 units, respectively. However, H9 showed robust growth of 50% YoY to 1237 units. WEY brand sales fell further– The total sales volume for the WEY brand fell by 37% YoY in January to 6,395 units, vs. declines of 20% for December and 8% for November. Sales for WEY VV5, VV6 and VV7 dropped by 18%, 46% and 24% YoY, respectively, to 1,724, 3,120 and 1,551 units. Strong truck sales growth– Pick-up truck sales totalled 13,421 units in January, representing a 17% YoY growth, thanks to the new model P-series with a decent sales volume of 5,551 units despite a 31% decline for Wingle to 7.9k units. Weak sedan sales : Sedan sales fell by 56% YoY to 1,725 units in January due to weakness for ORA R1 (-26% to 1295 units) and ORA iQ (-99.8% to 5 units) despite strong growth for C30 (+189% to 425 units). The export volume growth was 18% YoY with 4,442 units sold, implying a 30% sales decline for the China market. Important disclosures, including any required research certifications, are provided on the last three pages of this report. Great Wall Motor (2333 HK) 12 February 2020 GWM sales summary Model Jan-2020 YoY % 2020 YTD sales YTD YoY % P-series 5,551 5,551 Wingle 7,870 -31.4% 7,870 -31.4% Pick-up truck 13,421 17.1% 13,421 17.1% Haval-H2 2,011 -60.1% 2,011 -60.1% Haval-H4 1,294 -18.9% 1,294 -18.9% Haval-H6 26,414 -41.3% 26,414 -41.3% Haval-H9 1,237 50.1% 1,237 50.1% Haval-M6 14,291 18.4% 14,291 18.4% Haval-F5 1,630 -67.8% 1,630 -67.8% Haval-F7 10,193 -32.3% 10,193 -32.3% Other Haval models 1,650 13.5% 1,650 13.5% Haval sub total 58,720 -31.8% 58,720 -31.8% VV7 1,551 -24.1% 1,551 -24.1% VV6 3,120 -46.3% 3,120 -46.3% VV5 1,724 -17.8% 1,724 -17.8% P8 - -100.0% - -100.0% Wey sub total 6,395 -37.1% 6,395 -37.1% SUV Total 65,115 -32.4% 65,115 -32.4% Great Wall C30 425 189.1% 425 189.1% ORA R1 1,295 -26.0% 1,295 -26.0% ORA IQ 5 -99.8% 5 -99.8% Sedan sub total 1,725 -56.1% 1,725 -56.1% Total 80,261 -28.2% 80,261 -28.2% Including Export Sales Volume 4,442 18.4% 4,442 18.4% Source: Company Recommendation We have an Outperform (2) rating as we expect solid sales and margin improvement for GWM over 2020-21 backed by a decent product pipeline and cost savings execution by management. Key risks: lower-than-expected sales volumes and margins. In the interests of timeliness, this document has not been edited. 2 Great Wall Motor (2333 HK) 12 February 2020 Important Disclosures and Disclaimer This publication is produced by Daiwa Securities Group Inc. and/or its non-U.S. affiliates, and distributed by Daiwa Securities Group Inc. and/or its non-U.S. affiliates, except to the extent expressly provided herein. This publication and the contents hereof are intended for information purposes only, and may be subject to change without further notice. Any use, disclosure, distribution, dissemination, copying, printing or reliance on this publication for any other purpose without our prior consent or approval is strictly prohibited. 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