Great Wall Motor (2333 HK/601633 CH)

2H26 earnings inflection with attractive valuation

Maintain BUY. Great Wall's 2Q26 results were in line with its profit alert, with ASP beating our forecast on a record export mix. We see an earnings inflection in 2H26E, driven by the expected receipt of RMB3-4bn in Russian recyclingfee reimbursement by Dec 2026, new model ramp-ups (such as the H10), and stabilizing selling expenses following the completion of its direct-sales network expansion. Exports—now accounting for more than half of total sales volume with structurally higher margins—underpin earnings quality, while the Guiyuan platform should revive domestic sales, in our view.

 2Q26 core profit in line, revenue beat. Great Wall's 2Q26 net profit of RMB1,519mn (-67% YoY, +61% QoQ) fell within its profit-alert range of RMB1.4-1.7bn. The YoY decline was mainly due to the delayed recognition of about RMB2.0bn of recycling-fee reimbursement in Russia (vs. RMB2.3bn recognized in 2Q25); excluding this drag and adverse forex, core net profit was largely flat YoY. Revenue rose 9% YoY to RMB57.0bn, 4% above our forecast, driven by a record quarterly ASP of RMB181,000 (+8% YoY). GPM remained resilient at 18.3% (vs 18.8% in 2Q25).

 Prioritizing profit over volume. We cut our FY26E sales volume forecast by 30,000 units to 1.35mn units (0.7mn units for exports and 0.65mn units for domestic market), as it appears to us that Great Wall continues to prioritize profitability over volume. This implies 2H26 sales volume of about 0.77mn units, up 31% HoH and 2% YoY. Factoring in a higher export contribution offset by year-end bonus accruals, we expect 2H26 GPM to narrow 0.5ppts HoH to 17.9%. We conservatively assume RMB3.0bn of recycling-fee reimbursement to be received in 2H26. Accordingly, we trim our FY26E net profit by 1.3% to RMB9.2bn. For FY27E, we lower sales volume forecast from 1.6mn to 1.53mn units but expect rising exports and the Guiyuan platform to support margins, bringing our FY27E net profit forecast to RMB10.9bn (-7.5%).

 Valuation/Key risks. We maintain BUY and cut our H-share target price from HK\19.00 to HK14.00, now based on 10x FY27E P/E (prior 12x), to reflect compressed sector-wide valuation multiples. Our A-share target price is adjusted to RMB25.00, based on the current A/H premium of about 110%. Key risks to our rating and target price include lower sales volume and margins than we expect, as well as a further sector de-rating.

Earnings Summary -2333 HK

Source: Company data, Bloomberg, CMBIGM estimates Current Price HK\$8.4 RMB15.4

2333 HK 601633 CH

BUY BUY

Maintain Maintain

China Auto Ji SHI, CFA (852) 3761 8728 shiji@cmbi.com.hk

Wenjing DOU, CFA (852) 6939 4751 douwenjing@cmbi.com.hk

Austin Liang (852) 3900 0856 austinliang@cmbi.com.hk 12-mth Price Performance

Stock Performance

Source: FactSet

Stock Data

Source: FactSet

Figure 1: Quarterly results

Source: Company data, CMBIGM

Figure 2: Earnings revision

Source: CMBIGM estimates

Figure 3: CMBI estimates vs consensus

Source: Bloomberg, CMBIGM estimates

Financial Summary

Source: Company data, CMBIGM estimates. Note: The calculation of net cash includes financial assets.

Disclosures & Disclaimers

Analyst Certification

The research analyst who is primary responsible for the content of this research report, in whole or in part, certifies that with respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report. Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to the date of issue of this report; (2) wil deal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3) serve as an officer of any of the Hong Kong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies covered in this report.

CMBIGM Ratings

BUY

: Stock with potential return of over 15% over next 12 months

HOLD : Stock with potential return of +15% to -10% over next 12 months

SELL

: Stock with potential loss of over 10% over next 12 months

NOT RATED

: Stock is not rated by CMBIGM

OUTPERFORM

: Industry expected to outperform the relevant broad market benchmark over next 12 months

MARKET-PERFORM

: Industry expected to perform in-line with the relevant broad market benchmark over next 12 months

UNDERPERFORM : Industry expected to underperform the relevant broad market benchmark over next 12 months

CMB International Global Markets Limited

Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800

CMB International Global Markets Limited (“CMBIGM”) is a wholly owned subsidiary of CMB International Capital Corporation Limited (a wholly owned subsidiary of China Merchants Bank)

Important Disclosures

There are risks involved in transacting in any securities. The information contained in this report may not be suitable for the purposes of all investors. CMBIGM does not provide individually tailored investment advice. This report has been prepared without regard to the individual investment obiectives, financial position or special requirements. Past performance has no indication of future performance, and actual events may differ materially from that which is contained in the report. The value of, and returns from, any investments are uncertain and are not guaranteed and may fluctuate as a result of their dependence on the performance of underlying assets or other variable market factors. CMBIGM recommends that investors should independently evaluate particular investments and strategies, and encourages investors to consult with a professional financial advisor in order to make their own investment decisions.

This report or any information contained herein, have been prepared by the CMBIGM, solely for the purpose of supplying information to the clients of CMBIGM or its affiliate(s) to whom it is distributed. This report is not and should not be construed as an offer or solicitation to buy or sell any security or any interest in securities or enter into any transaction. Neither CMBIGM nor any of its affiliates, shareholders, agents, consultants, directors, officers or employees shall be liable for any loss, damage or expense whatsoever, whether direct or consequential, incurred in relying on the information contained in this report. Anyone making use of the information contained in this report does so entirely at their own risk.

The information and contents contained in this report are based on the analyses and interpretations of information believed to be publicly available and reliable. CMBIGM has exerted every effort in its capacity to ensure, but not to guarantee, their accuracy, completeness, timeliness or correctness. CMBIGM provides the information, advices and forecasts on an "AS IS" basis. The information and contents are subject to change without notice. CMBIGM may issue other publications having information and/ or conclusions different from this report. These publications reflect different assumption, point-of-view and analytica methods when compiling. CMBIGM may make investment decisions or take proprietary positions that are inconsistent with the recommendations or views in this report.

CMBIGM may have a position, make markets or act as principal or engage in transactions in securities of companies referred to in this report for itself and/or on behalf of its clients from time to time. Investors should assume that CMBIGM does or seeks to have investment bankin or other business relationships with the companies in this report. As a result, recipients should be aware that CMBIGM may have a conflict of interest that could affect the objectivity of this report and CMBIGM will not assume any responsibility in respect thereof. This report is for the use of intended recipients only and this publication, may not be reproduced, reprinted, sold, redistributed or published in whole or in part for any purpose without prior written consent of CMBIGM.

Additional information on recommended securities is available upon request.

For recipients of this document in the United Kingdom

This report has been provided only to persons (I)falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended from time to time)(“The Order”) or (II) are persons falling within Article 49(2) (a) to (d) (“High Net Worth Companies, Unincorporated Associations, etc.,) of the Order, and may not be provided to any other person without the prior written consent of CMBIGM.

For recipients of this document in the United States

CMBIGM is not a registered broker-dealer in the United States. As a result, CMBIGM is not subiect to U.S. rules regarding the preparation of research reports and the independence of research analysts. The research analyst who is primary responsible for the content of this research report is not registered or gualified as a research analyst with the Financial Industry Regulatory Authority (“FINRA”). The analyst is not subject to applicable restrictions under FINRA Rules intended to ensure that the analyst is not affected by potential conflicts of interest that could bear upon the reliability of the research report. This report is intended for distribution in the United States solely to "major US institutional investors", as defined in Rule 15a-6 under the US, Securities Exchange Act of 1934, as amended, and may not be furnished to any other person in the United States. Each major US institutional investor that receives a copy of this report by its acceptance hereof represents and agrees that it shall not distribute or provide this report to any other person, Any U.S. recipient of this report wishing to effect any transaction to buy or sell securities based on the information provided in this report should do so only through a U.S.-registered broker-dealer.

For recipients of this document in Singapore

This report is distributed in Singapore by CMBI (Singapore) Pte. Limited (CMBISG) (Company Regn. No. 201731928D), an Exempt Financial Adviser as defined in the Financial Advisers Act (Cap. 110) of Singapore and regulated by the Monetary Authority of Singapore. CMBISG may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C, of the Einancial Advisers Regulations Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, as defined in the Securities and Futures Act (Cap. 289) of Singapore, CMBISG accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact CMBISG at +65 6350 4400 for matters arising from, or in connection with the report.