Geely and Great Wall, two car manufacturers in transition, have recently shown significant differences in stock prices, with the former continuing to hit new highs in recent years while the latter has fallen back to May levels.
Geely has been discussed before, so this time the focus is on Great Wall. In Q3, the company's profit decreased by 8% year-on-year and 13% quarter-on-quarter. However, after excluding some non-recurring items, operating profit and net profit actually increased by about 9% and 27% year-on-year, respectively.
Nevertheless, Great Wall is facing increasing challenges in the domestic market, with its transformation progress relatively slow and its market share in segmented markets shrinking.
The company's overall sales volume in Q3 decreased by 14.7% year-on-year but increased by 3.4% quarter-on-quarter to 294,000 units, mainly driven by overseas sales. Overseas sales increased by 39.9% year-on-year and 12.9% quarter-on-quarter to 122,000 units, accounting for 41.7% of total sales. This was due to increased production at overseas factories, expansion of sales networks, and the introduction of more models.
Currently, the company guides for annual overseas exports of over 450,000 units, with a 30% increase to 580,000 units by 2025, and the launch of 8 export models. However, it is worth noting that the company expects next year's overseas profit to be relatively stable, likely affected by geopolitical factors such as increased tariffs in Brazil, scrap taxes in Russia, and intense competition in domestic exports.
While overseas profit expansion is hindered, the company's domestic sales in Q3 decreased by 33% year-on-year, further widening from a 23% decline in Q2. This may reflect the slow transformation of the company and the weakening competitiveness in the fuel vehicle market, possibly due to soft demand for the flagship Haval brand models and the limited appeal of niche off-road SUV Tank series models to mainstream audiences.
The company's penetration rate of new energy vehicles in the first three quarters stagnated at 25%, far below the industry's nearly 50% level. In addition, the company focuses on the high-end segment market above 250,000 yuan through its strategic brand Wey, but this means facing competitors such as Li Auto, Nio, and Huawei.
Overall, with the help of Latin America and Southeast Asia, the company's overseas growth is expected to be maintained, but the focus is on profitability. Domestically, the company will have significant product cycles next year, such as 2 Wey brand sedans, the second generation of Ora Cat, etc.
Therefore, given these uncertainties, it is reasonable for Great Wall to have a discount relative to its peers in terms of valuation

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Great Wall Motor is facing challenges recently, with a 8% year-on-year decline in Q3 profit and a 14.7% year-on-year drop in sales volume. Despite significant growth in overseas sales, domestic sales have plummeted, reflecting slow transformation and intensified market competition. The company expects annual overseas exports to exceed 450,000 vehicles, but geopolitical factors and domestic competition may affect profitability. Great Wall lags behind the industry average in the penetration rate of new energy vehicles and needs to focus on new product cycles and profitability in the future

- Geely and Great Wall Motors have shown significant stock price divergence, with Geely reaching recent highs while Great Wall's shares have fallen back to May levels.  
- Great Wall's Q3 profits declined by 8% year-on-year and 13% quarter-on-quarter, although adjusted operating and net profits increased by approximately 9% and 27%, respectively.  
- The company faces increasing domestic challenges, with a 33% drop in domestic sales, and its overall strategy may be hindered by geopolitical factors and intense competition in the domestic market.

Hong Kong Stock Market Review: The Falling Behind Great Wall