On Thursday, JPMorgan shifted its stance on Great Wall Motor Co Ltd. (2333:HK) (OTC: GWLLF), raising the stock from Neutral to Overweight and increasing the price target to HK$18.00 from HK$12.00. The revision reflects the firm's positive view on the automaker's future performance, particularly in the second half of 2024.
The upgrade is based on two main growth drivers identified by the firm. The first is the robust export business of Great Wall Motor, which exported 201,000 units in the first half of 2024, making up 36% of its total sales. The company is well on its way to achieving its full-year target of 400,000 to 500,000 units. Exports are expected to continue bolstering the company's earnings, offering both growth potential and a buffer against the challenging domestic market conditions.
Secondly, JPMorgan anticipates an improvement in the company's gross profit margin (GPM), supported by a shift towards a higher-end product mix. This includes the Tank and Wey Mountain series, which are projected to account for 22% of sales in 2024, up from approximately 17% in 2023. The move to more premium products is expected to contribute positively to Great Wall Motor's profitability.
The firm's analysis suggests that the combination of strong export performance and a strategic focus on higher-end products could provide a dual advantage to Great Wall Motor's financial outcomes. With these factors in mind, JPMorgan has presented a more optimistic outlook for the automaker's stock as it moves into the latter half of 2024.
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