HSBC Global Research released a report, resumed coverage of Geely Auto (00175.HK), giving the stock a 'buy' rating, and adjusting the target price from 15.7 yuan to 10.9 yuan.

Since suspending coverage last November, the bank pointed out that Geely's accumulated drop was 5%, lagging behind the 2% increase of the CSI300 in the same period. The bank claims that the company's resilience in terms of average selling price and profit margin per car under the price war is overestimated. However, this is offset in part by the sales growth that has exceeded expectations in the first five months of this year, benefiting from the strong electrification cycle.

The bank lowered its forecast for Geely's net profit for the next two years by about 28% and believes that unfavorable factors in profit margin have been largely reflected in its stock price. Looking ahead, the bank expects the company to launch 2 to 3 new car models in the second half of the year. It believes that the integration of existing models with strong new model updates will continue to drive sales growth, better product mix, and electrification level.