Great Wall Motor Drops as Earnings Miss Estimate: Shanghai Mover

Great Wall Motor Co., China’s biggest sport-utility vehicle maker, slumped the most in two years in Shanghai trading after posting profit that missed analysts estimates yesterday.

The stock fell 10 percent to 43.55 yuan as of 2:45 p.m. in Shanghai trading, the largest intraday decline since September 2011. Great Wall Motor fell 8.6 percent to HK$44.30 in Hong Kong trading.

Net income for the third quarter increased to 2.08 billion yuan ($342 million) from a year earlier, missing the 2.33 billion-yuan average of four analysts estimates compiled by Bloomberg. Gross margins fell from the previous quarter, which should disappoint investors, analysts including Zhi Aik Yeo at Jefferies Hong Kong Ltd. wrote in a note.

“We are suspicious that it was mainly increased depreciation that led to the margin dip,” the analysts wrote. The gross margin fell 0.9 percentage points to 26.3 percent from the previous quarter, they wrote.

The company’s shares have more than doubled in Shanghai this year before trading today, compared with the 4.62 percent drop in the Shanghai Composite Index. China September auto sales rose 21 percent to 1.59 million units.

“While in the near-term some investors may take profit at the current share price new highs, we believe any share price weakness would be a buying opportunity.” Paul Gong, a Hong Kong-based analyst at Citi Research, wrote in a report.

To contact the reporter on this story: Moxy Ying in Hong Kong at yying13@bloomberg.net

To contact the editor responsible for this story: Hwee Ann Tan at hatan@bloomberg.net

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