The overall business situation improved in 2023. Geely Automobile's revenue in 2023 reached a record high of 179.2 billion yuan, up 21% year on year, gross profit margin of 15.3%, up about 1.2 percentage points year on year, and net profit to mother of 5.308 billion yuan. Compared with net profit after excluding one-time bargaining acquisition proceeds in 2022, a sharp increase of 51% year on year.

Sales reached a record high in 2023. Geely's total sales volume in 2023 reached a record high of 1.687 million units, exceeding sales targets. New energy vehicle sales reached a record high of 487,000 units, a sharp increase of 48.3% year on year, and export sales reached a record high of 274,000 units, up 38.3% year on year.

By 2024, we are moving towards the annual sales target of 1.9 million vehicles. Fuel vehicles and new energy vehicles will develop in a balanced manner in 2024. The annual sales target is 1.9 million units, up 13% year on year, and the new energy sales target is expected to increase 66% year on year. Nine new energy products will be launched: Geely, Lynk & Krypton, and 3 each.

Investment advice. We believe that Geely Auto's brand structure is reasonable and clear. With the gradual implementation of the “Smart Geely 2025” strategy, the company's overall revenue and net profit to mother are expected to continue to grow. We expect the company's net profit for 2024-2026 to be $7.63 billion, $11.43 billion, and $15.50 billion, respectively, and EPS of $0.76, $1.14, and $1.54, respectively, and will be given 15-20 times PE in 2024, corresponding to a reasonable value range of HK$12.56-16.74 (HK$1 = RMB 0.9080), giving it a “superior to the market” rating.

Risk warning. New car sales risk, price war risk, raw material price increase risk.