Great Wall Motor(2333.HK)

Transcription

1 Great Wall Motor(2333.HK) Will still be benefit from the coming new SUVs Bloomberg Reuters POEMS 2333.HK 2333.HK 2333.HK Industry: Automobile Company Update Rating: Accumulate CP: 35.7HKD TP: 4.8HKD Company Profile Based in Baoding Hebei, Great Wall Motor (GWM) is the leading private auto manufacturer in pickup and economic SUV markets. In recent years, the Company entered new auto segment by launching small sedans, MPV, high end pickup and SUV. Summary In FY 212 and Q1 of 213, the net profits of GWM increased robustly by 65.7% and 73.4% yoy to CNY 5.68 billion and CNY billion respectively. In the same periods, its EPS stood at CNY 1.87 and CNY.62, which is within our expected and far better than that of peers. Great Wall Motor Phillip Securities (HK) Ltd Phillip Securities Research Rating 2. Accumulate - Previous Rating 2. Accumulate Target Price (HKD) Previous Target Price (HKD) 32 Closing Price (HKD) 35.7 Expected Capital Gains (%) 14.3% Expected Dividend Yield (%) 2.3% Expected Total Return (%) 16.6% Raw Beta (Past 2yrs w eekly data) 1.3 Market Cap. (HKD bn) 132,389 Enterprise Value (HKD mn) 12,13 52 w eek range (HKD) Closing Price in 52 w eek range The rally in profits was mainly attributed to the robust sales growth and upper shift of product structure. Stimulated by the wonderful demand of Havel H6 and M4, the company s SUV sales volume rose by 9% yoy to 28, units in 212, accounting for 45% of its total sales volume. Thanks to the high gross margin of SUV products, the aggregate gross profit margin of the company also rose by 2 ppts to 26.9% with the sales volumes of sedans and pickup trucks rising by 6% and 12% yoy, to 2, units and 137, units. In the first 4 months this year, The company s sales volume rose by 38%, among which, SUV sales volume increased by 9% from the same period of last year, taking about 14.2% of SUV market share in mainland China. The growth rate of car and pickup truck sales volumes stood at 15% and -3%. The sales target for 213 was set in a steady approach, at 7, units, up by 12% year on year. We expect the sales volume of the company in 213 will reach 75, units, rising by 2% year on year. Since the late two years, the company shifted its focus from small cars to Havel SUVs. As more competitors are entering the SUV market, a fiercer competition is expected. However, we still think in the medium-and-low market, where GWM s SUV products are positioned, the company, as the long-term leading player, possesses a stronger brand image and good reputation. As a result, it will still continue to enjoy the rapid growth of the segmented market in the following few years. In 213 and 214, the company will launch 9 new models Key Financial Summary FYE 12/11 12/12 12/13F 12/14F Revenue (RMB mn) 3,89 43,16 54,534 64,189 Net Profit, adj. (RMB mn) 3,426 5,692 7,449 8,898 EPS, adj. (RMB) P/E (X),adj BVPS (RMB) P/B (X) DPS (HKD) Div. Yield (%) 1.% 2.% 2.3% 2.8% Source: Bloomberg, PSR est. *All multiples & yields based on current market price Valuation Method PE Analyst 24-May Jun-12 Zhang Jing zhangjing@phillip.com.cn Jul Aug Sep Oct Nov-12 % 5% 1% 24-Dec Jan Feb Mar Apr-13 Volume, mn 2333 hk equity HSI 24-May of 1

2 GWM(2333.HK) It is expected that GWM, in this year, will launch a few SUV models including H6 Sport, H5 Re-design and two new models, H2 and H8. The positioning of H2 is lower than that of H3 and H8 is the company s first mediumand-high SUV. As GWM s Tianjin Plant II releases its capacity at the end of 213, the company s annual capacity will grow from 6, units to 8, units, meaning its SUV market share is expected to expand. On the sedan part, as the competition of sedan market is extremely fierce, GWM will still maintain a lower growth rate in the segment. In 213, the company will launch new sedan models such as C5 CVT, C5 Re-design, C3 Sport and C3 Hatchback. Valuation and rating. We expect that Havel H8 will become the next star product of GWM after H6. The new auto reserve in the future will also include H9, H4 and H1. By virtue of the rising sales proportion of highly-priced SUV, the profitability of GWM still has space for rise. So attention is worthwhile. We give the 12-month target price at HK$4.8 and PE ratio as 11 times of expected EPS for 214, 14.3% higher than the last closing price, so Accumulate rating reaffirmed. Fig 1.Views of GWM s revenue and net profit Revenue Net profit Net profit YoY Fig 2. GWM Monthly SUV sales 37, 32, 27, 22, 17, 12, 7, 2, -3, Unit yoy 29H 21H 211H 212H 25% 2% 15% 1% 5% % -5% -1% 3% 25% 2% 15% 1% 5% % -5% 35, 3, 25, 2, 15, 1, 5, Sedan Fig 4. GWM Monthly Pickup sales 15, 13, 11, 9, 7, 5, 3, 1, -1, -3, Unit Fig 5. Peer Comparison Mark Cap USD MPV yoy BEst Best P/E EV/BEst (Y+1) EBITDA P/B % 2% 15% 1% 5% % -5% -1% Best ROA LF ROE Ticker Name P/E (%) (%) 2238 HK Equity GAC HK Equity GWM HK Equity BYD HK Equity GEELY HK Equity BRILLIANCE HK Equity DONGFENG F US Equity FORD GM US Equity GM RNO FP Equity RENAULT VOW GR Equity VOLKSWAGEN DAI GR Equity DAIMLER BMW GR Equity BMW UG FP Equity PEUGEOT 3459 N/A N/A TTMT IN Equity TATA JP Equity TOYOTA JP Equity HONDA JP Equity NISSAN Source: Bloomberg Fig 3. GWM Monthly Sedan & MPV sales 2 of 2

3 GWM(2333.HK) FYE DEC FY1 FY11 FY12 FY13F FY14F Valuation Ratios P/E (X), adj P/B (X) Dividend Yield (%).7% 1.% 2.% 2.3% 2.8% Per share data (RMB) EPS, reported EPS, adj. NA NA NA NA NA DPS BVPS Growth & Margins (%) Grow th Revenue 79.4% 3.9% 43.4% 26.4% 17.7% EBIT 177.8% 8.5% 62.2% 3.7% 2.1% Net Income, adj % 26.8% 66.2% 3.9% 19.5% Margins EBIT margin 16.7% 13.8% 15.6% 16.1% 16.5% Net Profit Margin 11.8% 11.4% 13.2% 13.7% 13.9% Key Ratios ROE (%) 3.7% 25.6% 29.8% 31.1% 27.3% ROA (%) 14.% 12.1% 15.% 16.% 15.9% Income Statement (RMB mn) Revenue 22,986 3,89 43,16 54,534 64,189 Gross profit 5,688 7,496 11,598 14,833 17,62 Operating profit 3,785 4,126 6,716 8,779 1,533 EBIT 3,827 4,153 6,736 8,82 1,57 Profit before tax 3,815 4,13 6,841 8,93 1,675 Tax (214) (62) (1,119) (1,456) (1,74) Profit for the period 2,827 3,511 5,722 7,475 8,935 Minority interests (126) (84) (3) (26) (37) Total capital share 2,738 3,42 3,42 3,42 3,42 Net profit 2,71 3,426 5,692 7,449 8,898 Source: PSR 3 of 3

4 GWM(2333.HK) Ratings History 35 3 Market Price Target Price Source: Bloomberg, PSR May-13 Feb-13 Nov-12 Aug-12 May-12 Feb-12 Nov-11 Aug-11 May-11 Feb-11 Nov-1 Aug-1 May-1 Feb-1 Nov-9 Aug-9 May-9 Feb-9 Nov-8 Aug-8 May PSR Rating System Total Returns Recommendation Rating > +2% Buy 1 +5% to +2% Accumulate 2-5% to +5% Neutral 3-5% to -2% Reduce 4 <-2% Sell 5 Remarks We do not base our recommendations entirely on the above quantitative return bands. We consider qualitative factors like (but not limited to) a stock's risk rew ard profile, market sentiment, recent rate of share price appreciation, presence or absence of stock price catalysts, and speculative undertones surrounding the stock, before making our final recommendation 4 of 4

5 GWM (2333.HK) PHILLIP RESEARCH STOCK SELECTION SYSTEMS Total Return Recommendation Rating Remarks >+2% Buy 1 >2% upside from the current price +5% to +2% Accumulate 2 +5% to +2%upside from the current price -5% to +5% Neutral 3 Trade within ± 5% from the current price -5% to -2% Reduce 4-5% to -2% downside from the current price <-2% Sell 5 >2%downside from the current price We do not base our recommendations entirely on the above quantitative return bands. We consider qualitative factors like (but not limited to) a stock's risk reward profile, market sentiment, recent rate of share price appreciation, presence or absence of stock price catalysts, and speculative undertones surrounding the stock, before making our final recommendation GENERAL DISCLAIMER This publication is prepared by Phillip Securities (Hong Kong) Ltd ( Phillip Securities ). By receiving or reading this publication, you agree to be bound by the terms and limitations set out below. 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6 GWM (2333.HK) Contact Information (Regional Member Companies) SINGAPORE Phillip Securities Pte Ltd Raffles City Tower 25, North Bridge Road #6- Singapore Tel : (65) Fax : (65) Website: HONG KONG Phillip Securities (HK) Ltd Exchange Participant of the Stock Exchange of Hong Kong 11/F United Centre 95 Queensway Hong Kong Tel (852) Fax (852) Websites: INDONESIA PT Phillip Securities Indonesia ANZ Tower Level 23B, Jl Jend Sudirman Kav 33A Jakarta 122 Indonesia Tel (62-21) 5798 Fax (62-21) Website: THAILAND Phillip Securities (Thailand) Public Co. Ltd 15th Floor, Vorawat Building, 849 Silom Road, Silom, Bangrak, Bangkok 15 Thailand Tel (66-2) / Fax (66-2) Website UNITED KINGDOM King & Shaxson Capital Limited 6th Floor, Candlewick House, 12 Cannon Street, London, EC4N 6AS Tel (44-2) Fax (44-2) Website: MALAYSIA Phillip Capital Management Sdn Bhd B-3-6 Block B Level 3 Megan Avenue II, No. 12, Jalan Yap Kwan Seng, 545 Kuala Lumpur Tel (63) Fax (63) Website: JAPAN PhillipCapital Japan K.K. Nagata-cho Bldg., 8F, Nagata-cho, Chiyoda-ku, Tokyo 1-14 Tel (81-3) Fax (81-3) Website: CHINA Phillip Financial Advisory (Shanghai) Co. Ltd No 55 Yan An East Road, Ocean Tower Unit 2318, Postal code 21 Tel (86-21) Fax (86-21) Website: FRANCE King & Shaxson Capital Limited 3rd Floor, 35 Rue de la Bienfaisance 758 Paris France Tel (33-1) Fax (33-1) Website: UNITED STATES Phillip Futures Inc 141 W Jackson Blvd Ste 35 The Chicago Board of Trade Building Chicago, IL 664 USA Tel Fax AUSTRALIA PhillipCapital Australia Level 37, 53 Collins Street, Melbourne, Victoria 3, Australia Tel (613) Fax (613) Website: 6 of 6