Key Takeaways:
Great Wall Motor Co. (2333.HK) reported a 46% drop in first-quarter net profit to RMB945.5 million, missing analyst forecasts as foreign exchange losses weighed on the bottom line.
"Jefferies expects that the launches of products under the GWM ONE Platform and new overseas market contributions will improve the upside potential in sales and lead GWMOTOR to emerge from its 1Q26 earnings trough," a Jefferies report said.
The automaker’s revenue for the first quarter of 2026 rose 13% year-over-year to RMB45.1 billion. Excluding the impact of foreign exchange losses, net profit would have increased 42% from the prior year period to RMB1.1 billion, according to the Jefferies report. Morgan Stanley noted the core earnings of RMB482 million represented a 67% year-over-year decline.
A Russian scrappage tax created a significant cost impact, but the company is expected to receive tax rebates for at least two quarters starting in the second quarter of 2026. Jefferies estimates the rebates could lift the company's gross margin by approximately two percentage points.
Vehicle sales during the period increased 4.8% year-over-year to 269,000 units, though the pace lags the company's full-year target of 1.8 million units. The slower progress was attributed to a cautious strategy from wholesalers ahead of new model launches and constraints in channel preparation for its ORA brand.
Analysts are divided on the near-term outlook. Jefferies maintained its Buy rating on the stock with a HKD22 price target, citing the potential for a recovery. In contrast, Morgan Stanley rated the stock at Equalweight with a $15 price target, pointing to heightened short-term volatility despite the anticipated tax rebates.
The expected tax rebates and the launch of new models from the "GWM ONE Platform" are key catalysts for a potential second-quarter recovery. Investors will be watching 2Q26 results for signs of gross margin improvement and sales acceleration.
This article is for informational purposes only and does not constitute investment advice.
