Deutsche Bank raised its target price for Great Wall Motor (GWM)(02333) to HK$7.4 from HK$6.9, and maintained its "hold" rating.
GWM announced its December 2016 sales grew 57% to 150,548 units. Going into 2017, GWM stated that it will target to sell 1.25m units of vehicles, implying a growth rate of 16.3%.
Considering the new sales information provided by the company, The research house raised its FY2016-18 revenue forecast by 6.5%, 10.6% and 10.6%, on the back of higher sales volume estimates.
But DB is still cautious on the SUV segment competitions and margin trend for the company, mainly due to: (1) higher production costs to ensure product quality; and (2) higher R&D costs to defend against peers' competition.
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