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Equity Bottom-Up

Great Wall Motor has announced that it achieved full-year sales volume of 1.07 million vehicles, up 26% relative to a year ago. Sales volume exceeded the company’s 2016 target by 13%, backed by continued strength in the SUV segment. The company has set a sales target of 1.25 million vehicles for 2017, representing a 16% increase over 2016. While the achieved sales volume is impressive, we believe it is supported by the front-loading of sales due to the expectation of the sales tax cut expiration at the end of 2016. In our view, the sales target for 2017 is overly aggressive and we retain our forecast for 11% growth. Hence, we maintain our fair value estimate of HKD 10, along with our no-moat rating with negative trend for the company.Analysts: Phillip Zhong &amp; Michael Wu, CAIA

Great Wall Motor has announced that it achieved full-year sales volume of 1.07 million vehicles, up 26% relative to a year ago. Sales volume exceeded the company’s 2016 target by 13%, backed by continued strength in the SUV segment. The company has set a sales target of 1.25 million vehicles for 2017, representing a 16% increase over 2016. While the achieved sales volume is impressive, we believe it is supported by the front-loading of sales due to the expectation of the sales tax cut expiration at the end of 2016. In our view, the sales target for 2017 is overly aggressive and we retain our forecast for 11% growth. Hence, we maintain our fair value estimate of HKD 10, along with our no-moat rating with negative trend for the company.Analysts: Phillip Zhong &amp; Michael Wu, CAIA

2017 Sales Volume Target May Be Overly Aggressive