【Financial Analysis】Great Wall Motors: Adhere to long-termism in the fierce competition

Xinhua Finance Shijiazhuang, May 11 (Reporter Liu Taoxiong) "The total operating income was 42.860 billion yuan, a year-on-year increase of 47.60%; the net profit attributable to the parent company was 3.228 billion yuan, a year-on-year increase of 1752.55%; deducted non-net profit of 2.024 billion yuan, a year-on-year turnaround of ......" Recently, Great Wall Motors handed over a brilliant first-quarter report card. At the 2024 General Meeting of Great Wall Motors held on the 10th, the company's management proposed to adhere to long-termism in the fierce market competition, give full play to the long board, and pursue a high-quality market share.

Play the longboard and do something

In 2023, China's automobile production and sales will exceed 30 million units, passenger car production and sales will hit a record high, new energy vehicle production and sales will be booming, and automobile exports will reach a new level...... Behind the seemingly "bumper harvest", 2023 is also known as the "volume" year of automobiles in the industry, and the difficulty of profitability is the most headache for automobile manufacturers.

In this context, in fiscal year 2023, Great Wall Motor will achieve revenue of 173.212 billion yuan, a year-on-year increase of 26.12%; net profit was 7.022 billion yuan, down 15.06% year-on-year; The non-net profit was 4.834 billion yuan, an increase of nearly 7.98% year-on-year. Great Wall Motor said that during the reporting period, the company's automobile volume and price rose, especially the sales volume in overseas markets hit a record high, and the net profit was lower than the same period last year, mainly due to the impact of exchange rate gains in the same period.

How does Great Wall Motor view the current competitive situation in the industry? What kind of development strategy does Great Wall Motors adhere to? At the shareholders' meeting, the company's management responded.

"Now the automotive industry is very competitive, and we have found that the loss of the industry has increased in the past two years, especially in the field of electric vehicles. We don't expect the intensity of competition in the industry to decrease in the next three years, so we must stick to a long-term approach. Wei Jianjun, chairman of Great Wall Motors, said that the so-called long-termism is to do something and not to do something, give full play to the long board, and pursue a quality market share. Models with particularly serious losses or moderately less sales in the market, and those with relatively high profits or no losses will be vigorously promoted.

GF Securities Research Report believes that the continuous optimization of product structure has driven the company's profitability in the first quarter. According to the data, in the first quarter, the sales of Great Wall Motor's Haval, WEY, pickup, Ora, tank and other brands were 158,000, 9,608, 44,000, 15,000 and 49,000, respectively, an increase of 25.5%, 182.3%, -10.9%, -15.4% and 103.2% year-on-year. bicycle revenue increased to 155,600 yuan, a year-on-year increase of 18.0%; The corresponding net profit of a single vehicle was 11,700 yuan, a year-on-year increase of 1382.8%.

The system layout is electrified and intelligent

Electrification and intelligence are the main trends in the development of the automobile industry, and Great Wall Motors has also made a systematic layout in these two aspects. Mu Feng, President of Great Wall Motors, introduced that Great Wall Motors has made a layout of all technology categories and the whole industry chain in the field of electrification, and is also committed to building the most complete intelligent industrial ecology in terms of intelligence.

From the perspective of new energy, the transformation progress of Great Wall Motors is not eye-catching. According to the data, Great Wall Motor's new energy vehicle sales in 2023 will be 262,000 units, a year-on-year increase of 98.74%, but it will only account for 21.3% of the total sales of 1.2307 million units. In 2023, the penetration rate of new energy vehicles in mainland China will be 31.6%, and Great Wall Motors will be 10 percentage points lower.

At the shareholders' meeting, Liu Bao, deputy general manager of Great Wall Motors, introduced the accumulation of core technologies in the field of new energy. He said that Great Wall Motors has completed the layout of the complete new energy core industrial chain, and has also reserved some highly competitive technologies and products. For example, for the next generation of solid-state batteries, Great Wall Motors currently has the ability to prepare small-capacity all-solid-state pouch cells, which can greatly improve the energy density of the battery and accelerate the pace of solid-state battery application in vehicles. In terms of fast charging technology, 4C supercharging capacity cells have been developed, and 6C technology is currently in the verification stage, which can be charged for 500 kilometers in 10 minutes after the vehicle is installed.

In 2023, Great Wall Motor will launch the Hi4 hybrid technology, which is considered to be an important technology of Great Wall Motor in the field of new energy. Liu Bao said that for Hi4 technology, Great Wall Motors is not only to create a product, but to create a Hi4 technology series, including the Hi4 basic version applied to the main family car Raptor and Thunder series, the Hi4 performance version developed for large and medium-sized vehicles, and the Hi4-T exclusive for hard off-road. In the future, we will continue to carry out technological innovation under this system, iterate from the dimensions of efficiency and performance, and create products with a better user experience.

In terms of intelligence, Wu Huixiao, vice president of product intelligence of Great Wall Motors, said that Great Wall Motors follows the principle of comprehensive consideration of leading functions, leading performance and leading costs. She believes that the future direction of intelligent driving and autonomous driving is clear, even convergent. But on the intelligent cockpit, the imagination space is limitless.

At the just-concluded 2024 Beijing Auto Show, the WEY brand Blue Mountain Intelligent Driving Edition made its debut, and the Blue Mountain Intelligent Driving Edition has comprehensively upgraded the intelligent cockpit and intelligent driving, which can realize full-scene NOA, cross-layer memory parking, automatic parking, tracking and reversing and other functions. The Coffee OS cockpit system equipped with the Blue Mountain Intelligent Driving Edition has been rated as "meeting the excellent requirements of the intelligent cockpit smooth performance certification implementation plan" by Thiel Certification Center Co., Ltd. Guolian Securities Research Report believes that the release of the Blue Mountain Intelligent Driving Edition is a sign of the acceleration of Great Wall Motor's intelligence, and the continuous follow-up of intelligence is expected to further strengthen the company's product competitiveness.

Maintain the momentum of high growth in going overseas

In addition to the optimization of product structure, the growth of exports has also greatly increased the profits of the company behind the sharp increase in the performance of Great Wall Motors in the first quarter. According to the data, in the first quarter of 2024, Great Wall Motor will sell 275,300 new cars, a year-on-year increase of 25%, of which overseas sales will reach 92,800, a year-on-year increase of 78.51%.

Guotai Junan Research Report believes that the profitability of the company's overseas models is higher than that of domestic models, and the progress of overseas market expansion and sales performance are also accelerating, and the company's overall profitability is expected to continue to improve in the future. The company actively promotes the development of overseas export business through product technological innovation, channel expansion and reform, localized production, etc., and brands such as Weipai, Tank, and ORA continue to break through in overseas markets, and it is expected that the company's export sales will maintain a high growth momentum in 2024.

At the shareholders' meeting, Wei Jianjun revealed that Great Wall Motor's overseas sales will challenge 500,000 units this year. Shi Qingke, vice president of Great Wall Motors, added that in terms of brands, to challenge this goal, the Haval brand is the market, with a target sales of 300,000 units, a target sales of 60,000 pickup trucks, and a target sales of 5 to 60,000 tank brands.

It is reported that Great Wall Motors has accelerated its overseas expansion with the "ONE GWM" (One Great Wall) strategy, and the overseas market has covered more than 170 countries and regions, with more than 1,000 overseas sales channels.

With the increasingly fierce competition in the domestic auto market and more and more car companies accelerating the layout of overseas markets, how can Great Wall Motors ensure corporate profits in the competition in overseas markets?

"The competition of Chinese automakers in the international market is an unavoidable issue. We will focus on the 'ONE GWM' strategy, so that the allocation of resources is intensive and the efficiency is multiplied. In addition, it is necessary to continue to open source and put all categories and models of all grades into more market segments to create profits and create value. Shi Qingke said that the magnitude of different overseas markets is different, industrial policies, product demand, religion and culture are different, so overseas operations in a sense the layout value is greater than the short-term business value, Great Wall Motors as a very early to go out of the car company, in the overseas market more and more stable, I believe that profitability will be better and better.

Editor: Wang Yuanyuan

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