长城汽车Q1：海外多元化推动利润率扩张，但外汇影响拖累净利润；电动化仍是主要风险

Great Wall Q1: Margin expanded on overseas diversification, butFX impact drags net profit; Electrification remains key risk Mixed Q1 results: Earnings impacted by FX effects, though underlying operations havestabilized.Great Wall reported Q1 revenue of RMB 45.1bn, +12.7% yoy and -34.9% qoq. The yoy growth is driven by both shipment growth (+4.8% yoy) and ASP expansion (+7.6% yoy,estimated). The QoQ decline is largely dragged by a 32.8% drop in shipment volume, reflectingseasonal weakness and demand pull-forward due to subsidy last year. Great Wall recorded an18.5% gross margin in Q1 26, +61bps vs. Q1 25 and +120bps vs. Q4 25. Margin expansionwas driven by both overseas sales mix shift (48.3% in Q1 26, vs. 35.4% in Q1 25 and 42.9%in Q4 25), and higher high-end brands (WEY+Tank) mix (23.8% in Q1 26 vs. 21.5% in Q1 25and 26.5% in Q4 25). Opex remained high on 12.9% in Q1 26, vs. 12.8% in Q1 25 and 13.0%in Q4 25, as the company continue to expand its DTC channel. Operating profit reached RMB1.2bn with a 2.7% margin in Q1 26, vs. 4.3% in Q1 25 and 2.5% in Q4 25, primarily due tolower FX gain this year vs. Q1 25. As a result, net income came in at RMB 945mn, -46.0% yoyand -23.2% qoq, implying a 2.1% margin, vs. 4.4% in Q1 25 and 1.8% in Q4 25. Excluding FXeffects, net income would have grown 41.7% yoy. Looking ahead, overseas diversification and scrappage tax rebates from Russia areexpected to drive sequential improvements in Q2 and Q3 2026.The company continuesto gain traction in overseas markets, with shipment rising 17% yoy in Q1 26, alongside broadergeographic diversification. Notably, the contribution from Russia declined to 34% in Q1 26,from 39% in Q1 25 and 46% in Q4 25, reducing concentration risk. Scrappage tax rebatesrelated to the Russian market for Q4 25 (est. RMB 200bn) and Q1 26 (est. RMB 100bn) haveyet to be received and are expected in Q2 2026, according to management, which shouldboost profitability. In addition, the company plans to roll out new models including the V9X(with management expectations of c.5k units in steady-state monthly sales), Tank 300 Hi4-T,and Haval H10 in late Q2 / early Q3, as well as additional WEY and Ora models in 2H. Overall,we are encouraged by the healthy gross margin and progress in expanding overseas into non-Russia markets. However, the company’s slow electrification transition remains a key overhang,raising concerns over the competitiveness of its new launches, limiting valuation upside, andweighing on the outlook. EXHIBIT 5:EV (BEV & PHEV) sales mix declined to 19.6%in Q1 2026, compared to 24.4% in Q1 2025 and 31.3%in Q4 2025; the decrease in EV contribution was largelydragged by PHEV/EREV decline EXHIBIT 6:The sales mix improvement from Wey wasoffset by Haval, resulting in flat ASP; Wey’s mix rose to8% in Q3 25 (from 4% in Q3 24 and 7% in Q2 25), whileHaval’s grew to 59% (from 58% in Q3 24 and 57% in Q225) EXHIBIT 7:Overseas market contributed 130k units salesvolume in Q1 2026, equivalent to 48.3% of total sales,vs. 35.4% in Q1 2025 and 42.9% in Q4 2025 EXHIBIT 9:East and Central Europe (mainly Russia),Middle East & Africa, and Oceania and South Americaare the top export destinations, claiming 50%, 16%,14%and 9% export volume respectively in the quarter; theRussian market mix increased to 45% from 39% Source: CAAM and Bernstein analysis EXHIBIT 10:Selling expenses arrived at RMB 2.9bn in Q32025 (+43.7% yoy and +6.3% qoq), which implied 4.8%of total revenue vs. 4.0% in Q3 2024 and 5.2% in Q22025 EXHIBIT 11:Administrative expenses were RMB 3.4bn inQ3 2025 (+12.0% yoy and +3.0% qoq), which implied5.5% of revenue; vs. 6.0% in Q3 2024 and 6.3% in Q22025 EXHIBIT 13:Net income in Q1 2026 arrived at RMB 945mnwith 2.1% net margin, compared to 4.4% for Q1 2025and 1.8% for Q4 2025 EXHIBIT 12:Operating profit reached RMB 1.2bn with2.7% operating margin in Q4 2025, vs. 4.3% in Q1 2025and 2.5% in Q4 2025 * Great Wall received RMB 2.2bn government grants in Q2 25. Stripping outgovernment grants, net margin would have been 4.5% for Q2 25.Source: Company report and Bernstein analysis INVESTMENT IMPLICATIONS We rateGreat Wall Market-Performwith TP ofHK$16.50. BERNSTEIN TICKER TABLE I. REQUIRED DISCLOSURES References to "Bernstein" or the “Firm” in these disclosures relate to the following entities: Bernstein Institutional Services LLC(April 1, 2024 onwards), Sanford C. Bernstein & Co., LLC (pre April 1, 2024), Bernstein Autonomous LLP, BSG France S.A. (April 1,2024 onwards), Sanford C. Bernstein (Hong Kong) Limited盛博香港有限公司,Sanford C. Bernstein (Canada) Limited, SanfordC. Bernstein (India) Private Limited (SEBI registration no. INH000006378), Sanford C. Bernstein (Singapore) Private Limited,Sanford C. Bernstein Japan KK(サンフォード・C・バーンスタイン株式会社)and analysts employed by Société GénéraleAfrica Technologies & Services to produce Bernstein research under a Global Services Agreement in place between Bernsteinand Société Générale. Bernstein is part of a joint venture betwe