New-model sales as key after 1Q26 solid GPM

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR <GO> OR http://www.cmbi.com.hk 1 MN 27 Apr 2026 CMB International Global Markets | Equity Research | Company Update Great Wall Motor (2333 HK/601633 CH) New-model sales as key after 1Q26 solid GPM China Auto 12-mth Price Performance Source: FactSet Maintain BUY. Great Wall’s 1Q26 GPM beat our prior forecast despite industry headwinds, which gives us more confidence in its FY26-27E GPM. We are of the view that the chance of rolling out a competitive new model for Great Wall is increasing given its planned 12 new models this year.  1Q26 core profit largely in line, GPM beat. Great Wall’s 1Q26 revenue rose 13% YoY amid a sales volume growth of 5% YoY, or 4% lower than our prior forecast. GPM widened by 0.6ppts YoY to 18.5% in 1Q26 despite rising raw-material costs, 0.7ppts higher than our forecast. SG&A and R&D expenses were largely in line with our projection. Recycling fee reimbursement in Russia was at a slower pace than we had expected, which resulted in a net profit of RMB945mn in 1Q26, in line with our forecast excluding Russia’s recycling fee reimbursement.  We turn more positive on GPM in FY26-27E. Great Wall’s GPM beat our forecasts by two quarters in a row, which gives us more confidence in its full-year margins despite rising raw-material costs. We project its FY26 GPM to widen by 0.1ppts YoY to 18.1%, aided by rising exports, the new platform Guiyuan and better product mix. We expect the cost reduction efforts from the new platform to be more apparent in FY27E with more new models. Therefore, we project FY27E GPM to be 17.9% despite a more competitive industry landscape.  Possible positive surprise from a plethora of new models. Great Wall plans to roll out about 12 new models in FY26E, the same amount as FY24 and FY25 combined. Although we are of the view that Great Wall is still optimizing its model line-up after the lessons from the Wey Lanshan, Gaoshan and Ora 5, the chance of having a more competitive new model is increasing. We project its FY26E sales volume to rise 10% YoY to 1.45mn units, largely driven by Wey. We expect Wey and Ora to further drive FY27E sales volume higher to 1.6mn units.  Valuation/Key risks. We cut our FY26E net profit forecast by 13% to RMB10.2bn with slightly lower sales volume, higher selling expenses and lower other income assumptions. We raise our FY27E net profit by 4% to RMB11.8bn as new model effect could be more apparent next year. We maintain our BUY rating and H-share target price of HK$19.00, based on 12x FY27E P/E (prior 12x FY26E P/E). Our A-share target price of RMB28.50 is based on Great Wall’s average A/H premium of 70% over the past six months. Key risks to our rating and target price include lower sales volume and margins than we expect, as well as a sector de-rating. Earnings Summary - 2333 HK (YE 31 Dec) FY24A FY25A FY26E FY27E FY28E Revenue (RMB