New Models Driving Sales valentino uk sale Higher

EventGreat Wall Motors (OTCPK:GWLLY) (OTCPK:GWLLF) reported November sales with volume up +7% y/y to 74.5k units driven by a whopping +50% increase in SUV to 59k units. Core SUV models such as the H1, H2, H6 and the H9 drove the strong growth profile with sales from the new models (H1 and H9) exceeding market expectations. Similar to trends we see in Guangzhou Auto's (OTC:GNZUF) November SUV demand, I expect the momentum to last through the last month of the year and well into Chinese New Year in February. Reiterating my bullish view on GWM.

HighlightsNew models driving the upside. Early November, GWM launched the fullsize H9 and the compact H1 model with the H9 selling between Rmb230k 273k and H1 selling between Rmb69k 83k. The demand for the two models was strong with the H9 selling 2.2k units and the H1 selling 6k units for the month. Consumer feedback has been mostly positive and this bodes well for incremental demand as word of mouth spreads. Particularly on the H1, the trendy design, safety features and technology package were some of the key factors influencing consumers' purchasing decision of the H1 according to Chinese press.

Demand for legacy models still strong. H6 and H2 sales continue to see robust demand and remain GMW's core products. H6 volume was 31k units as capacity expansion in Tianjin ramps up and H2 saw a volume of +12k. Overall, GMW is on track to finish the year strong and the company's focus on SUVs has proven to be the right strategy given the strong demand for both the large and compact SUV models in China. The company is set to introduce new models such as the Coupe C and H7 that is priced between Rmb150k200k that should bode well for the SUV demand as oil prices decline further. However, it is worth noting that an SUVfocused strategy is unsustainable in an event of higher oil prices, so GMW needs to diversify further and focus on the sedan side of the equation to become a truly global auto OEM.

ConclusionBuy GWM. The stock is attractive at 9x FY15 P/E and 3.5% dividend yield.


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