GWM (2333.HK) - 1Q24 results beat expectations

GWM (Great Wall Motor) reported its 1Q24 results with a revenue of RMB42.86bn (+48% YoY) and net profit of RMB3.23bn (+1752% YoY), better than expected.  During the period, the revenue growth was driven by volume increase (+25%) and ASP hike (+18%). Gross profit margin also increased by 4.0pp YoY or 1.6pp QoQ to 20.0%. Core net profit (excl. RMB1.4bn one-off items) per car came in at about RMB7k, up 141% from about RMB3k in 4Q23.

The Mgt highlighted that GWM is working to improve its operation efficiency aiming for higher profitability. In terms of marketing strategy, it plans to shift towards online channels (e.g. Douyin), compared with previous offline promotions.

Our views: We believe GWM’s robust exports sales and strong EV growth will continue to drive its performance. Although China's auto market is experiencing a fierce price war, we believe GWM will be able to weather through the storm. The ticker is trading at 9.5x FY24E P/E, an attractive valuation for long-term investors. 

Risk: 1) lower-than-expected sales volume