Credit Suisse lowered its target price for Great Wall Motor (02333) to HK$29 from HK$30, and maintained a "neutral" rating.
The house said the company's 3Q result surprised on the downside on disappointed margin, 18% below its estimate. Key downside surprise came from weaker-than-expected margin, mainly because Great Wall officially started offering Rmb6,000 per unit discount for H6 SUV since Sep. It thus reduces its 2014/15/16E profit by 4% on average.
Credit Suisse forecasts Great Wall's fundamentals to trough out since 4Q14, with an estimated Rmb2.7 bn profit, up 31% YoY and 65% QoQ. Key growth drivers are volume spike in China's burgeoning SUV sector, from both existing H6/H2 SUV and upcoming series of new SUV products- H1/H9 in 4Q14, H8/Couple C in 1H15, H7 in 2H15.
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