GWM (2333 HK) Sales Structure Is Continuously Optimized June 20, 2022 62

PSR Recommendation: BUY Status: Upgraded
Target Price: HKD24.70

Investment Summary
2021H2 Results Are Slightly Lower than Expected Due to Chip shortage and Rising Raw
Material Prices
In 2021, Great Wall Motor reported operating revenue of RMB132.17 billion, up 32% yoy.
The net profit attributable to the parent company was RMB6.73 billion, up 25.4% yoy. The
earnings per share was RMB0.73, and the cash dividend per share was RMB0.07 (taxinclusive). Including a mid-term dividend of RMB0.3 in 2021, the dividend payout ratio
reached 51%. The gross margin in 2021 was 16.16%, down 1.05 ppts yoy. Due to stock
option expenses and increased investment in intelligence, electrification and new model
R&D, administration expenses and R&D expenses surged to RMB4.04 billion and RMB4.49
billion, respectively, up 58.4% and 46.4% yoy, respectively. Eventually, the net profit margin
fell 0.26 ppts to 4.93%.
Last year’s results were slightly lower than we expected, mainly due to the serious chip
shortage in the automotive industry in H2. The production and delivery pace of vehicle
factories was interrupted, while the continuous price rise of raw materials affected the gross
margin. In H2, Great Wall Motor saw a 7.5% year-on-year decrease in sales volume, a
10.47% year-on-year increase in revenue, and a 24.2% year-on-year decrease in net profit.
Among them, Great Wall Motor reported a year-on-year decrease of 6.9% and 35.8%,
respectively in the net profit attributable to the parent company in Q3 and Q4. The gross
margin was 17.33% and 15.3%, respectively. Meanwhile, the net profit margin in Q4 fell to
3.9% from 4.9% in Q3 due to factors such as the centralized accrual of year-end employee
bonus expenses, the accrual of charging equity of Ora users, and the accrual of equity
incentive expenses.
In 2021, Great Wall Motor sold 237 thousand pickups, 907 thousand SUVs and 137 thousand
sedans, respectively, a year-on-year increase of 4%, 9% and 135%, respectively. New energy
models and high-end models represented by Ora and Wey have made great contributions. In
2021, Great Wall Motor sold 139 thousand new energy vehicles, a year-on-year increase of
137%

About the author

Profile photo of Zhang Jing

Zhang Jing
Phillip Securities (HK)

Bachelor Degree in Tongji University of Engineering; Master Degree in East China Normal University of finance. Currently covering the automobile and air sectors. She has years of experience in investment research and is good at combining analysis for the companies with industry prospects.

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