Maintain BUY. We revise up Great Wall’s 2H25E gross margin after solid 2Q25 earnings, especially as we turn more positive on its off-road style SUVs. While we expect Tank to continue being the foundation of Great Wall’s resilient earnings in FY26-27E, we think NEVs of Wey and Ora could be a positive surprise, which could result in a re-rating with higher NEV sales portion.

Solid 2Q25 results. Great Wall’s 2Q25 net profit rose 19% YoY and 162% QoQ to RMB4.6bn, in line with its preliminary results. Its 2Q25 gross margin rose 1ppt QoQ to 18.8% despite fiercer price war, better than our expectation. We believe the average selling price (ASP) and gross margin lifts from the higher sales volume of the Tank and Wey brands could be stronger than we had expected. We also view Great Wall’s 2Q25 core earnings excluding government grants and forex gains as solid.

Off-road vehicles to lift 2H25 margins. We raise our FY25E sales volume forecast by 5% to 1.35mn units, as we turn more positive on its off- road style models, including the Tank models, Menglong series and Dagou series. We believe higher sales volume of these high-margin vehicles could also lift Great Wall’s overall margins. Accordingly, we raise 2H25E gross margin by 0.9ppts to 19.3% (also +0.9ppts HoH). With conservative forecasts for forex and government grants, we expect Great Wall’s 2H25E net profit to rise 15% YoY to RMB6.5bn. We estimate its net profit excluding non-recurring items to rise 21% HoH to RMB4.3bn in 2H25E.

Wey and Ora as sales drivers for FY26-27E. While we expect Tank to continue being the foundation of Great Wall’s resilient earnings in FY26- 27E, we think NEVs of Wey and Ora could be a positive surprise. We expect Wey’s sales volume to rise 62%/28% YoY to 0.18mn/0.23mn units in FY26-27E, respectively, as the comeback of the Gaoshan and Lanshan models has provided a good lesson for Great Wall to make premium NEVs. It also gives us more confidence in Ora’s upcoming new models based on a new platform. We believe investors could re-rate the stock, if Great Wall’s NEV market share surges with improving profitability in FY26E. We revise up Great Wall’s FY26-27E sales volume forecasts by 7% and 12% to 1.5mn/1.65mn units, respectively.

Earnings forecasts/Valuation. We raise our FY25-27E net profit forecasts by 24-37% to RMB12.8bn/13.4bn/14.8bn with higher sales volume and margin estimates. We maintain a BUY rating and lift H-share target price from HK$14.00 to HK$22.00, based on 13x FY26E P/E (prior 10x FY25E P/E). Our A-share target price of RMB30.00 is based on Great Wall’s A/H premium of 46%. Key risks to our rating and TP include lower sales volume and margins, as well as a sector derating.