Possible positive surprise from new platform

Great Wall Motor (2333 HK/601633 CH) Possible positive surprise from new platform Maintain BUY.Great Wall’s 4Q25 revenue and GPM beat our forecast whilenet profit missed due to the recycling fee reimbursement in Russia. Despite aYoY decline of1.5pptsamid stiffer competition, FY25 GPM of 18.0% was stillresilient among peers, thanks to its improving product mix.We believe suchtrend could extend into FY26Ebased on its model pipeline and export target.It appears to us that Great Wall’s scheduled new models are more promisingthan previous years with its new competitive platform. China Auto 4Q25 core net profitin line withour forecast, GPM beat.Great Wall’srevenue in 4Q25 rose 16% YoY toanall-time high of RMB69bn, 9% higherthan our priorforecast.GPM in 4Q25 narrowed by1.2pptsQoQto 17.3%,or 0.2ppts higher than our projection. Gross profit beat was largely offsetby SG&A and R&D expenses in 4Q25. Net profit excluding governmentgrants, VAT refundsand Russia’s recycling fee reimbursement in 4Q25was about RMB407mn, in line with our forecast. More competitive pricing with new platform.Management is positive onthe new platform,Guiyuan, as it is capable ofproducing vehicles withdifferent powertrains and a parts sharing ratio ofalmost85%.Four newWey-brand models are scheduled to roll out in FY26E with morecompetitive pricing aided bycost reduction efforts from the new platform.We revise up FY26E sales volume forecast of Wey brand by 20,000 unitsto 200,000 units, or doubling from FY25. Better product mix, rising exports to sustainGPM.Apart from Wey, wealso expect exports, especially from the Tank brand (export target of 0.1mnunits in FY26E), to lift average selling price (ASP) and uphold GPM. Werevise up export volume by 3% to 0.62mnunits in FY26E given the currentgeopolitical dynamics. Accordingly, we project ASP to rise by1%YoYtoRMB171,000and GPM to widen by 0.1ppts YoYto 18.1% in FY26E. Earnings/Valuation.We maintain our FY26E sales volumeforecast of1.49mn units but revise up Wey-brand sales volume and exports as notedabove. We project FY26E net profit to rise19% YoY to RMB11.8bn, takingexpenses for direct-operated store expansion and reimbursement fromRussia into account. We maintain our BUY rating and cut ourH-sharetarget price slightly fromHK$20.00 to HK$19.00, still based on 12x ourrevised FY26E P/E. Our A-share targetprice of RMB26.00 is based onGreat Wall's A/H premium of55%. Key risks to our rating and target priceinclude lower sales volume and margins than our expectation, as well as asector de-rating. Disclosures& Disclaimers Analyst CertificationThe researchanalyst who is primary responsible for the content of this research report, in whole or in part, certifies that with respectto 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 neitherthe 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 thedate of issueof this report; (2) willdeal 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 HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies covered in this report. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock withpotential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expectedto perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 monthsCMB InternationalGlobal MarketsLimited Address:45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CMB International Capital Corporation Limited (a wholly ownedsubsidiary of China Merchants Bank) Important DisclosuresThere are risks involved in transacting in any securities. The information contained in this report may not be suitable forthe purposes of all investors.CMBIGM does not provide individually tailored investment advice. This report has been prepared without regard to the individual investment objectives, financial positionor special requirements. Past performance has no indication of future performance, and actual events may dif