Great Wall's Weak Preliminary Results Reinforce Our Cautious View; FVE Maintained at HKD 10.50

We keep our fair value estimate for no-moat Great Wall Motor at HKD 10.50. The company’s preliminary core net profit for the first half, down 19%-37% year over year, was a miss and our cautious view on its margin trend and the company’s new energy vehicle strategy is unchanged. While we raise our 2022 net profit forecast by 26% to factor in the noncash foreign exchange gains in the second quarter, we maintain our 2023-24 net profit estimates. We also keep our 2022-24 revenue forecasts unchanged. Our fair value implies a 2023 forward price/earnings ratio of 9.8 times, compared to its 10-year historical average of 9 times.