Daiwa raises Great Wall Motor's target price to 22 yuan and adjusts next year's net profit forecast upward

Daiwa Research Report indicates that Great Wall Motor (02333.HK) achieved revenue of 61.2 billion yuan in the third quarter, representing year-on-year and quarter-on-quarter growth of 20.5% and 17%, respectively. Net profit was 2.3 billion yuan, down 31% year-on-year and 50% quarter-on-quarter. Revenue for the first three quarters reached 153.6 billion yuan, an 8% year-on-year increase; net profit was 8.6 billion yuan, a 17% year-on-year decline.

The firm noted that Great Wall Motor accelerated the construction of direct-to-consumer (DTC) channels and the launch of new models in the first three quarters, leading to a year-on-year increase in sales and R&D expenses of 55.5% and 7%, respectively, while increased brand promotion and advertising expenditures also compressed overall gross margin.

Based on the profit pressure in the third quarter, the firm has lowered its revenue forecast for 2025 by 11% and net profit forecast by 7%. However, due to growth from new models and overseas expansion, the net profit forecast for 2026 has been raised by 5%. The target price has been increased from HKD 19 to HKD 22, reiterating a "Buy" rating; it is expected that sales from 2025 to 2027 will reach 1.36 million to 1.64 million units, an increase of 9% to 11%, driven by increased production capacity in Brazil and the new model cycle, which will boost revenue during this period