Great Wall Motor Shares Rebound From Steep Opening Losses
By Yifan Wang
Great Wall Motor Co.'s shares rebounded in Hong Kong morning trade after steep opening losses, as investors weighed weak first-quarter profit against analysts' expectations of better earnings going forward.
The stock was last up 0.5% at HK$9.29 on Monday, after falling as much as 6.9% earlier in the session. The fall came after the Chinese car maker posted an 89% drop in its first-quarter profit, missing market expectations.
Citi analysts in a note attributed the slump in bottom-line to "poor sales volumes and higher incentives" as China's overall auto sales slowed and price competition heated up in 2023, in part due to the end of tax cuts on auto purchases which boosted sales during the pandemic.
"We expect share prices to initially react negatively," the Citi analysts said. They also cut their target price for the stock to HK$11.00 from HK$16.00.
However, the analysts maintain a buy call on the stock, pointing to upcoming "catalysts that could re-rate Great Wall Motor's earnings momentum" from the second quarter.
In particular, they note that profitability trends are likely to improve as Great Wall rolls out its new hybrid sport utility vehicle model, while easing raw material costs could offer further margin support.
Write to Yifan Wang at yifan.wang@wsj.com
(END) Dow Jones Newswires
April 23, 2023 23:36 ET (03:36 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.-
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