October sales growth in-line
New car sales of Great Wall Motor increased 68.1% yoy and 4.4% mom
in Oct. 2012. YTD, the company sold 484,436 units, up by 31.7% yoy. Expect total volume to grow 25.4% yoy in 2012 and 21% in 2013.
Maintain HOLD rating, TP of HK$22.14, derived from 9x FY13E.
October 2012 new car sales increased 68.1% yoy. Great Wall Motor
announced that its sales volume in Oct. 2012 increased 68.1% yoy and 4.4%
mom, to a total of 61,207 units. By product segment, its SUV segment grew
164.7% yoy in Oct 2010; and posted robust a growth of 85.0% yoy in 10M12.
Pick-up product sales increased 20.0% in the single month, and grew 14.5% yoy
in YTD. Despite its sedan recorded a monthly growth of 23.0% yoy, but it decline
7.5% mom. The segment posted a merely growth of 3.4% yoy in 10M12.
Expect total volume to grow 25.4% yoy in 2012, SUV constitutes 44% of
total. We now forecast Great Wall‘s overall growth of 25.4% yoy in 2012, (pick-up
9.5% yoy; SUV 73% yoy; and sedan 0%) in 2012. And we expect a further growth
of 20.9% in 2013. SUV still is the major volume and revenue contributor of the
company; and the segment will account 44% and 51% to its total volume in
Major investment risks: 1) Fiercer competition in SUV segment lead price
reduction in 2013, as other domestic car makers are introducing more SUV
products; 2) Slower-than-expected Great Wall’s sedan sales.
Maintain HOLD rating, revised TP to HK$22.14. The counter currently trades at
11.2x FY12E PE and 9.4x FY13E. We see the valuation stretched. Thus, we
maintain our HOLD rating, with a target price of HK$22.14, translate to 9.0x
FY13E PE. In additional, the market expects Great Wall Motor will be replace
BYD in HSCEI and contribute 1.1% to the index. It may trigger share price
increase in short term.