Company Report: Great Wall Motor (02333 HK) Toliver Ma 马守彰 公司报告：长城汽车 (02333 HK) +852 2509 5317 [email protected] 国泰君安研究 19 September 2016 Gross Margin Surprises, Upgrade to ‘Buy’ 好于预期的毛利率，上调至“买入” GTJA Research GTJA Rating: Buy 1H16 net profit up 4.4% yoy to RMB 4,926 mn, in line with market Upgraded consensus, but better than our expectations. Overall vehicle sales grew 评级： 买入 (上调) 8.8% yoy, driven by strong SUV growth. Gross margin decreased 1.1ppts to 23.9% compared to 1H15; however, the decrease is less than our expectation as the Company sold more Haval H6 vehicles which have a higher margin 6-18m TP 目标价: HK$9.29 and benefit from better plant utilization. Revised from 原目标价: HK$7.14 We revise up EPS (basic) by 15.7% to 17.0% during 2016-2018 due to Share price 股价： HK$7.960 expected better gross margin percentage. Growth momentum intact as Aug. 2016 sales up 25.4% yoy. We believe that the Haval Series, especially Stock performance the Haval H6, is highly regarded by the market and the Haval H7 is quite 股价表现 welcoming in its segment. The solid sales figures should allow GWM to 50.0 % of return maintain its market share and slow down the decrease in gross profit margin. 40.0 We upgrade our investment rating to “Buy”. We expect that GWM will be 30.0 able to defend its market share through 1) limiting growth of its selling price 20.0 and offering more sales discounts or other forms of promotion, and 2) 10.0 improving product mix and specifications, such that we would see more 0.0 launches of Haval SUVs. The current valuation of the Company is relatively (10.0) attractive, and we revise up TP to HK$9.29, representing 8.3x 2016 PER, 8.0x (20.0) 2017 PER, 1.6x 2016 PBR and 1.4x 2017 PBR. (30.0) ) (40.0) 2016 上半年净利润同比增长 4.4％至 4,926 百万元人民币，与市场预期一致，但好于我们 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 的预期。总体汽车销量同比增长 8.8％，受强劲的 SUV 增长所带动。毛利率较同期下降 1.1 HSI Great Wall Mot-H 02333 HK ( 个百分点至 23.9%;但是下降的幅度低于我们的预期，因高利润率的哈弗 H6 有较高的销售 占比及得益于较好的产能利用率。 Change in Share Price 1 M 3 M 1 Y 因预期更好的毛利率，我们对 2016-2018 年基本每股收益上调 15.7％-17.0％。2016 年 8 股价变动 个月 个月 年 长城汽车 1 3 1 月销量同比增长 25.4％，增长势头持续。我们认为哈弗系列，尤其是哈弗 H6 深受市场认 Abs. % 5.4 26.8 1.0 可和哈弗 H7 在其细分市场颇受欢迎。稳建的销售数字可令长城汽车维持其市场份额和减 绝对变动 % 慢毛利率的下降速度。 Rel. % to HS index 2.6 9.2 (6.2) 相对恒指变动 % 我们上调投资评级为“买入”。我们预计长城汽车能够通过：1）限制了其售价的增长和推出 Avg. share price(HK$) 7.7 7.4 7.5 平均股价（港元） MotorWall Great 更多折扣优惠或其他推广及 2）提高产品结构和规格来捍卫自己的市场份额，并应看到更 Source: Bloomberg, Guotai Junan International. 多哈弗 SUV 车型推出。目前估值相对有吸引力，目标价上调至 9.29 港元，相当于 8.3 倍 2016 年市盈率和 8.0 倍 2017 年市盈率，1.6 倍 2016 年市净率和 1.4 倍 2017 年市净率。 Year End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE 年结 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 12/31 (RMB m) (RMB m) (RMB) (△%) (x) (RMB) (x) (RMB) (%) (%) 2014A 62,599 8,042 0.881 (2.2) 7.2 3.672 1.7 0.267 4.0 26.1 2015A 76,033 8,059 0.883 0.2 7.1 4.206 1.5 0.190 2.8 22.4 2016F 88,703 8,653 0.948 7.4 7.0 4.908 1.3 0.245 3.6 20.8 2017F 99,922 8,973 0.983 3.7 6.9 5.659 1.2 0.233 3.4 18.6 2018F 113,218 9,061 0.993 1.0 6.8 6.405 1.1 0.246 3.6 16.5 Shares in issue (m) 总股数 (m) 9,127.3 Major shareholder 大股东 Wei Jian Jun 34.94% Market cap. (HK$ m) 市值 (HK$ m) 72,653.1 Free float (%) 自由流通比率 (%) 65.1 3 month average vol. 3 个月平均成交股数 (‘000) 34,346.4 FY16 Net gearing (%) FY16 净负债/股东资金 (%) Net Cash 52 Weeks high/low (HK$) 52 周高/低 11.220 / 4.940 FY16 Est. NAV (HK$) FY16 每股估值（港元） 10.3 Source: the Company, Guotai Junan International. Company Report See the last page for disclaimer Page 1 of 9 1H16 Results Review 2016 Great Wall Motor’s (“GWM” or “the Company”) 1H16 net profit attributable to parent company up 4.4% yoy to RMB 4,926 million, in line with market consensus but better than our expectations. In 1H16, overall sales volume up 8.8% yoy ember to 454,813 units, while revenue up 12.2% yoy to RMB 41,672 million. Strong SUV segment (up 13.2% yoy) continued to lead t Sep the Company to grow but dragged by sedan and pick-up trucks which decreased 20.4% and 3.9% respectively. Gross profit 9 1 margin was 25.9% in 1H16, a decrease of 1.1ppts compared to 1H15. However, the decrease is less than our expectation. The slower than expected decrease is due to 1) higher sales proportion of Haval H6 which has a higher margin (also explains why revenue increase more than volume growth), such that we see that blended ASP increased by 3.5% yoy, and 2) depreciation and amortization expense are shared with more products as utilization rate in 1H16 was better. Costs are a slight concern as we saw selling costs / admin costs to revenue ratio increase 0.2 ppts and 0.1 ppts, respectively. On selling expense, we noticed after-sales services expenses increased 27.2% to RMB 542 million which is higher than the overall increase in revenue. This is probably due to GMW has offered more after sales services for their new and returned customers which is buddle with the vehicle sales. In administrative expenses, depreciation and amortization expense rise more than revenue due to the expansion on Xushui plant. Table-1: Summary of 1H16 Financial Results of GWM (in RMB mn, except per share items) 1H16 1H15 yoy 2Q16 1Q16 qoq Key financials Total revenue 41,672 37,145 12.2% 20,792 20,880 -0.4% Operating income 41,601 37,115 12.1% 20,757 20,844 -0.4% Cost of sales 30,898 27,129 13.9% 15,310 15,588 -1.8% Gross profit 10,774 10,016 7.6% 5,483 5,292 3.6% Business tax and surcharges 1,537 1,323 16.2% 769 769 0.1% Selling expenses 1,402 1,193 17.6% 775 628 23.4% Administrative expenses 1,907 1,657 15.1% 974 932 4.5% Finance expenses / (income) 35 219 -84.0% (3) 37 -106.8% ) Operating profit 5,814 5,615 3.6% 2,891 2,923 -1.1% Profit before taxation 5,920 5,718 3.5% 2,957 2,963 -0.2% 02333 HK ( Income tax expenses 992 1,000 -0.8% 426 566 -24.7% Net profit attributable to parent 4,926 4,717 4.4% 2,529 2,396 5.6% Minority interest 0 0 n.a. (1) 1 n.a. 长城汽车 Basic EPS (RMB) 0.54 0.52 4.4% 0.28 0.26 5.7% Operating data Sales volume(unit) 454,813 417,875 8.8% 221,387 233,426 -5.2% Domestic Sales 448,063 405,733 10.4% 217,804 230,259 -5.4% Export 6,750 12,142 -44.4% 3,583 3,167 13.1% ASP(RMB) 91,624 88,890 3.1% 93,919 89,449 5.0% MotorWall Great Margins and ratios (%) ppt ppt Gross profit margin(%) 25.9% 27.0% (1.1) 26.4% 25.3% 1.0 OP margin(%) 14.0% 15.1% (1.2) 13.9% 14.0% (0.1) Net profit margin(%) 11.8% 12.7% (0.9) 12.2% 11.5% 0.7 Selling costs to revenue 3.4% 3.2% 0.2 3.7% 3.0% 0.7 Admin costs to revenue 4.6% 4.5% 0.1 4.7% 4.5% 0.2 Effective tax rate 20.1% 21.2% (1.1) 16.8% 23.6% (6.8) Source: the Company, Guotai Junan International. Company Report See the last page for disclaimer Page 2 of 9 Sales Analysis 2016 Riding on the solid first half performance, the momentum continued in Aug. 2016. Total vehicle sales was 73,079 units, with yoy growth of 25.4%. YTD sales accumulated to 592,306 units in Aug. 2016, achieved yoy growth of 13.7% and ember represents 62.3% of management target. Strong sales continued to be driven by Haval H6, up 49.4% yoy, while Haval H9 also t Sep recorded significant growth of 36.2% in Aug. 2016. New model Haval H7 was launched in Apr. 2016 and recorded 16,620 units 9 1 in Aug. 2016. Although this model received lukewarm demand at the beginning, growth of this model started to pick up in Jul 2016. The waiting time is long at the moment as the Company takes time on the quality control. The Haval H7 is priced at around RMB 150,000 to RMB 170,000 which has limited or no direct competition from other Chinese self owned brands. We are optimistic at this model especially when the longer wheel base Haval H7L is expected to hit the market in 4Q16 and customer are also waiting for four-wheel drive version for better off road experience. On the other hand, sales of pick-up truck shows upturning trend since May. 2016, by recording positive growth in the last four months and hit 19.8% yoy growth in Aug.