Key points of the announcement: The company disclosed the 2024 three-quarter report. The company's revenue for the single quarter was 60.378 billion yuan, +20.5%/+9.8%, respectively; net profit was 2.455 billion yuan, +92.4%/-72.8%, respectively.

Shareholders' profit after deducting non-recurring profit and loss was 2.76 billion yuan, and the performance was in line with market expectations.

The Q3 performance was in line with expectations after deducting one-time factors. 1) Revenue: The company achieved total sales volume of 0.534 million units in Q3, +18.7%/+11.3%, including 0.0696 million units sold by the non-concurrent Lynk & Co brand, +20.5%/+7.2%; after deducting the Lynk & Co brand, the average price of the company's 24Q3 Geely + ZEEKR bike (including the approximate cost of parts and technical licensing) was 0.13 million yuan, +1.8%/-1.3%. Among them, the revenue of ZEEKR Q3 was 18.36 billion yuan, +31.9%/-8.3% year over month, and the sales volume of ZEEKR Q3 was 0.055 million vehicles, +51.1%/+0.4%, respectively. 2) Gross profit margin: 2024Q3 gross margin was 15.6%, +0.1/-0.9 pct, respectively. The main reasons for the month-on-month decrease were: cost reduction was mainly confirmed in Q2, leading to a high base and accounting standard adjustments affecting gross margin of about 0.4 pct & ZEEKR gross margin falling month-on-month (impact of fluctuations in battery business). 3) Expense rate: 24Q3 sales expense rate/administrative expense ratio were 4.47%/5.82%, respectively, -1.7/-0.5pct year-on-year, and -0.9/+-1.2pct month-on-month, respectively. 4) Other matters: Based on conservative financial estimates, Linker accrued a one-time impairment of 0.598 billion yuan for 2024Q3, and the company expects that Linker will not experience any further impairment in the future.

5) The company achieved net profit of 2.46 billion yuan in 24Q3, +92.4%/-72.8% year-on-month (Q2 had a significant impact on the project). The corresponding bicycle net profit was 0.0055 million yuan (referring to the Geely brand bicycle net profit), which was +76%/+86.6% year-on-month. Among them, the net profit of ZEEKR 2024Q3 was 0.008 billion yuan (-0.09 billion yuan for 2023Q3, -0.559 billion yuan for 2024Q2), which turned a loss into a profit, and a bicycle net profit of 0.0002 million yuan.

Geely purchases JiKrypton shares: The listed company entity paid 5.835 billion yuan in cash to acquire 11.3% of ZEEKR's shares. After the acquisition is completed, Geely Auto will hold 62.8% of ZEEKR's shares. ZEEKR buys Lynk & Co shares: ZEEKR paid 3.6 billion yuan to acquire 20% of Lynk & Co's shares held by Geely Holdings & 5.4 billion yuan to acquire 30% of Volvo's shares. At the same time, GKrypton will increase its capital. After the acquisition is completed, Jik ZEEKR will hold a total of 51% of Lynk & Co shares. Since GKrypton/Lynk & Co have similar price positioning models, the merger can enhance strategic collaboration and business integration within the group, eliminate competition in the industry, reduce repeated investment, complement the sales network, and further enhance the cost competitiveness of the supply chain.

Profit forecast and investment rating: Due to good feedback from Galaxy's new model terminals, we raised the company's 2024-2026 net profit forecast to 16.8/13.6/16 billion yuan (originally 15.1/11.5/13.8 billion yuan), corresponding PE was 8/9/8 times, respectively, maintaining Geely's “buy” rating.

Risk warning: The recovery in downstream demand for passenger cars fell short of expectations; the price war exceeded expectations.