[ET Net News Agency, 27 April 2020] Jefferies Research said Great Wall Motor's
(GWM)(02333) 1Q net loss of Rmb650m was driven mainly by the floating FX loss of Rmb600mn
which could reverse if ruble appreciated.
The research house noted that GWM is the clear leader in the "pickup truck" segment with
market share expansion to 49% in 1Q. Daily pickup truck volume already exceeded 1k units
in April and monthly sales may exceed 20,000 units with >50% market share (versus 35% in
FY2019). The new high-end pickup truck model will be launched in May and this will boost
production/GPM.
Jefferies suggested that investors look beyond the weaker than expected 1Q results
(trough) to accumulate GWM for auto space exposure given 12 months of sequential
improvement.
Given the established domestic supply chain, GWM not only has limited risk from the
US/EU lockdown but could benefit as a local substitute in parts/components business.
Jefferies forecast earnings to decline 14.4% in FY2020 before a 25.6% recovery in FY2021.
It maintained its "buy" call and a target price of HK$6.1 on GWM. (KL)