Great Wall Earnings: Unit Revenue and Margin Beat Due to Strong Export Sales

No-moat Great Wall Motor, or GWM, reported in-line revenue for the first quarter but a much stronger-than-expected net profit. We attribute the 18-times year-over-year earnings growth to the company’s 79% surge in export sales in the quarter, which helped to uplift unit revenue and mitigate margin pressure from price competition in the China market. We raise our fair value estimate to HKD 10.80 per share from HKD 9.80, which implies 2024 forward price/earnings ratio of 8 times, in line with its 10-year historical average of 9 times. At the current price level, GWM’s H-shares remain fairly valued in 3-star territory.