Citi Research said Great Wall Motor's (02333) 3Q result looks disappointing, with net profit of Rmb1,632mn only accounting 36% of its 2H14 estimate.
Key reasons for the disappointment include low margin of H2 SUV at start-up stage; operating deleverage of sedan, M4 and H5; R&D and trial production cost of pipeline models like H1 and H9.
The house expects the outlook is a lot brighter than the past, with strong ramp up of H2 which should also raise its profitability, rising monthly sales of H6 with resilient pricing of Sports version, and recovery of the sedan and H5 after facelift launches. The H1 and H9 should also contribute incremental profits for 2015, and H1 will offer both higher ASP and margins than its precedent M4.