The Zhitong Finance App learned that Citibank released a research report saying that Great Wall Motor (02333) announced that its initial net profit for the first half of 2026 was 2.35 billion yuan to 2.6 billion yuan, a sharp drop of 59% to 63% year on year, meaning net profit for the second quarter was 1.41 billion yuan to 1.66 billion yuan, down 64% to 69% year on year, and rebounded 49% to 75% from quarter to quarter, far below market expectations of 2.99 billion yuan. The rating was downgraded from “buy” to “sell”, and the target price was drastically reduced from HK$14.8 to HK$7.3.
Citi believes that earnings far below expectations are mainly affected by delays in the receipt of Russian scrap tax rebates of about 1.9 billion yuan in the fourth quarter of 2025 and the first quarter of 2026, as well as exchange losses of about 200 million yuan. Management expects the refund to be received in or before December 2026, but considering the many delays, Citi believes it is unlikely that the Group will receive the tax refund.
Management raised the 2026 export sales target from 600,000 vehicles to 700,000 units in response to strong export sales. Monthly export sales are expected to reach 70,000 units in October or November. Citi maintained its 2026-2028 sales forecast of 1.43 million, 1.56 million and 1.64 million units, and raised its export sales forecast to 700,000, 773,000 and 829,000 units, driving up revenue forecasts by 4% to 5% to 241 billion, 258 billion and 270 billion yuan. Taking into account raw material cost inflation, the bank lowered its gross margin forecast by 0.3 to 1 percentage point to 15%, 15.1% and 15.2%. The 2026-2028 net profit forecast was drastically reduced by 40% to 43% to 6.072 billion, 7.837 billion and 9.365 billion yuan.