Key investment points

Galaxy E5 and Starwish are listed to expand the Galaxy brand's market coverage

Galaxy E5 and Star Wish were launched in August and October 2024, targeting the A-class SUV and A0-class sedan markets respectively. The pricing was 0.1098-0.1458 million yuan and 0.0698-0.0988 million yuan, respectively, broadening the brand's price range. The Galaxy E5 achieved sales of 12,230 units in the first month of its launch, thanks to its product strength advantages. In terms of product strength, Star Hope also has the potential to be a hit, and is expected to be the top seller in the market segment. We expect the Starship 7 to be launched by the end of 2024, positioning the B-class SUV hybrid market, further complementing the model matrix and driving the brand's sales growth. Galaxy expects sales volume to reach 0.296/0.76 million vehicles in 2024/2025, up 254.3%/156.9%, respectively.

ZEEKR 7X and ZEEKR MIX were launched one after another, and the model matrix accelerated. Starting in 2023, the pace of new car releases under the ZEEKR brand accelerated. Sales increased from 0.072 million units in 2022 to 0.119 million units in 2023, an increase of 65.0% over the previous year. ZEEKR is expected to release ZEEKR 7X and ZEEKR MIX in 2024, which are positioned as B-class SUVs and B-class MPVs respectively. The price of the ZEEKR 7X is 0.2299-0.2699 million yuan, which has a competitive advantage over competitor Model Y and BYD Tang. New cars in 2025 include hunting and C\ D class SUVs. The number is still high, and the energy form may expand to the plug-in hybrid market. ZEEKR's sales volume is expected to reach 0.217/0.445 million units in 2024/2025, up 82.8%/105.1%, respectively.

The transformation of Lynk & Co New Energy is on the right track. Pure electric models are expected to expand the market. In 2023, the Linker brand launched its first native new energy architecture CMA-evo platform, and the new energy transformation is officially on the right track. In 2023 and 2024, Linker 08 and Lynk & Co 07 were released based on the CMA-evo platform, respectively, to help increase the sales volume of Lynk & Co. New Energy. In January-August 2024, Linker New Energy's sales volume was 0.096 million vehicles, up 449.6% year-on-year, accounting for 56.7%. The Linker Z10 was launched in September 2024, positioned as a C-class pure electric sedan, and was the first model for the Linker brand in the pure electric market; the Linker Z20 debuted in Europe in October and positioned as an A-class pure electric SUV, which is expected to become a key model for Geely to open up the global market. Lynk & Co., Ltd. expects sales volume to reach 0.167/0.287 million vehicles in 2024/2025, up 158.6%/72.2%, respectively.

Investment advice: The new car plan is progressing smoothly. Giving a “buy” rating benefits from a good new car cycle. Geely is expected to see an increase in both sales volume and share. We expect the company's total sales volume in 2024-2026 (including ZEEKR and Lynk & Co) to be 2.143/2.782/3.28 million vehicles, with operating revenue of 239.03/325.52/395.69 billion yuan respectively, with year-on-year growth rates of 32.9%/36.2%/21.6%, and net profit to mother of 16.41/12.74/16.47 billion yuan, respectively, with year-on-year growth rates of 209.1%/-22.4%/29.3%, respectively 1.63/1.26/1.64 yuan/share, 3-year CAGR is 45.8%. In view of the company's obvious growth advantage and leading model product cycle advantage, it was given a “buy” rating.

Risk warning: Product delivery falls short of expectations; industry competition intensifies; risk of price increases for upstream raw materials; risk of deviations in sales forecasts.