Citi Cuts Great Wall Motor Target Price to HK$18.9, Keeps "Buy" Rating

Citi released a research report stating that Great Wall Motor's net profit for 2023 is expected to reach RMB 9.912 billion, down 21.7% year-over-year and below market expectations. This decline is primarily attributed to a 1-percentage-point drop in gross margin to 18.5%, higher expenses related to its direct-sales model and new product promotions, a delayed recognition of approximately RMB 1 billion in tax refunds from Russia, and increased year-end bonuses. Nevertheless, the company’s full-year revenue is projected to rise by 10.2% year-over-year to RMB 222.79 billion, in line with expectations, with an average selling price of RMB 168,300 per vehicle. Management has set a 2024 sales target of 1.8 million units, including 600,000 units overseas, with strategic focus on Central and South America, the Middle East, Europe, and right-hand-drive markets. Based on these factors, Citi lowered Great Wall Motor’s target price from HK$23.70 to HK$18.90 but maintained a “Buy” rating.