EUR 850.00 For Business Accounts Only

Morningstar | New Vehicle Models Drive Rebound in Monthly Sales, Maintaining Great Wall’s FVE at HKD 6.10

No-moat Great Wall Motor Co reported strong volume growth of 18% for February 2019, on the back of 2% growth in January. Strong sales volume was primarily driven by the firm’s Haval and Ora brands. Sales continue to benefit from the introduction of Haval F5 and F7 models at the end of 2018, despite coming at the cannibalization of Haval H6. Sales of Ora, Great Wall’s first electric vehicle brand, reached 3,500 units in February, on track to surpass our estimate of 10,000 for 2019. The sales of Ora, however, have a negligible impact on the firm’s bottom line because these vehicles are primarily sold at cost. The rationale behind the Great Wall’s push for Ora is solely to harvest NEV credits in fulfilling quotas set out by the central government.

On the flip side, sales of Great Wall’s premium WEY SUVs posted a year-over-year decline of 27%. We are leaving our forecast of 35% full-year sales volume growth unchanged at the moment, as sales figures can often be volatile month to month. We maintain our no-moat rating and fair value estimate of HKD 6.10 on Great Wall Motor and consider shares of the firm fairly valued.