Maintain BUY. Despite the GPM miss in 3Q25, Great Wall is poised to achieve its all-time high sales volume in FY25E with efficient cost controls on SG&A and R&D. We also project its FY26E sales volume to rise 16% YoY to 1.57mn units, the highest growth since FY17. We expect Tank to continue being the foundation of Great Wall’s resilient earnings, with Wey and Ora being sales drivers in FY26E.

Prudent SG&A and R&D in 3Q25 despite GPM miss. Great Wall’s average selling price (ASP) rose 3.6% QoQ in 3Q25, slightly stronger than our prior expectation. 3Q25 GPM narrowed by 0.4ppts QoQ to 18.4%, despite QoQ sales volume growth of 13%, lower than our prior forecast. That also reflects the Tank brand’s importance to Great Wall’s profitability and prolonged price war, in our view. SG&A and R&D combined ratio narrowed by 1.2ppts QoQ, better than our projection. Net profit in 3Q25 fell 50% QoQ to RMB2.3bn, largely due to the postponement of Russia’s recycling fee reimbursement. Net profit excluding government grants, VAT refund and Russia’s recycling fee reimbursement rose by about RMB500mn QoQ in 3Q25.

4Q25 outlook. We maintain our FY25E sales volume forecast of 1.35mn units, which implies 0.43mn units or 11% YoY growth in 4Q25E. We lower our 4Q25E GPM forecast after 3Q25 GPM miss. Accordingly, we project net profit YoY growth of 15% to RMB2.6bn in 4Q25E, or a downward revision of 12% for Great Wall’s FY25E net profit forecast.

FY26 outlook. It appears to us that Great Wall is still optimizing its model line-up, as its new model pipeline has been changing constantly. Nevertheless, we believe Wey and Ora are poised to enter the fast lane from FY26E. We project sales volume of these two brands combined to double YoY to 0.34mn units in FY26E, although the company targets even higher. We revise up Great Wall’s FY26E sales volume forecast by 5% to 1.57mn units. On the other hand, we cut FY26E GPM forecast by 0.4ppts, which results in a net profit of RMB13.2bn (+17% YoY).

Valuation/Key risks. We maintain a BUY rating but cut our H-share target price from HK$22.00 to HK$20.00, based on 12x our FY26E P/E (prior 13x) to reflect its 3Q25 GPM miss. Our A-share target price of RMB28.00 is based on Great Wall’s A/H premium of 53%. Key risks to our rating and target price include lower sales volume and margins than our expectation, as well as a sector re-rating.