FAST NEWS: Great Wall Motor’s profit plunges on subsidy decline, product mix adjustment
The latest: Great Wall Motor Co. Ltd. (2333.HK; 601633.SH) reported last Friday its revenue dropped 13.6% year-on-year in the first quarter to 29.04 billion yuan ($4.22 billion), while its net profit fell by an even larger 89.3% to 174 million yuan.
Looking up: While its revenue declined, Great Wall’s operating costs also dropped 10.2% to 29.38 billion yuan for the quarter. The net profit decline also was due partly to non-operational factors, including a 73% drop in non-operating income such as government subsidies and compensation income to 140 million yuan.
Take Note: The company explained its poor performance owed mainly to an adjustment of its product mix and increased investment in new energy brand building and R&D.
Digging Deeper: Founded in 1995, Great Wall Motor was listed on the Hong Kong and Shanghai Stock Exchanges in 2003 and 2011, respectively. It makes and sells automobiles and their components, including new energy vehicles (NEVs). Its products have been exported to over 170 countries and regions, with cumulative overseas sales of over 1 million units. The company’s revenue growth slowed to only 0.7% last year on weak demand and a global automotive chip shortage. But its management forecast the automotive market will show stable to positive development trends this year, with Great Wall planning to launch more than 10 NEV models.
Market Reaction: Great Wall Motor’s Hong Kong shares opened down 6.9% on Monday, but recovered in the morning and closed up 0.8% HK$9.31 by the midday break. The stock now trades near the lower end of its 52-week range.
Translation by Jony Ho
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