The company's recent situation

The company sold 250,136 units in November 2024, +27% year over year, +10% month on month, of which new energy sales volume was 122,453 units, +94% year over year, and +13% month on month. By brand, Galaxy, ZEEKR, and Lynk & Co sold 75,288 units, 27,011 units, and 32,679 units, respectively, +121%/+106%/+9% year-on-year, and +18%/+8%/+5% month-on-month. The export sales volume in November was 32,814 units, +13% month-on-month, and 379,396 units were exported in January-November, +56% year-on-year.

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Multi-brand sales drive a month-on-month increase in the penetration rate of new energy sources, and Galaxy's sales are growing strongly. The penetration rate of new energy sales in November was +16ppt/+1ppt to 49%, respectively, of which Galaxy's sales volume was +121%/+18%, respectively, to 75,228 units. Since the second half of 2024, Galaxy's new car cycle has been strong. Among them, Galaxy E sales in May have been climbing month by month, and the cumulative sales volume since its launch has exceeded 0.06 million units. Starwish sold more than 0.02 million units in November, becoming an important product in the A0 class electric sedan market. Looking ahead, as Geely Starship 7 gradually starts pre-sale and the richness of the Galaxy series product matrix increases, we are optimistic that Galaxy's competitiveness in the 0.15 million yuan price segment will continue to increase. The new energy transformation of the Lynk & Co brand accelerated. In November, the sales volume of Linker's new energy models reached 20,084 units, with a monthly penetration rate of over 61%. In terms of the new car matrix, the pure electric SUV Lynk & Co Z20 began pre-orders, complementing the layout of Linker & Co's pure electric models at the 0.15 million yuan level. Thanks to the rise in sales volume of the ZEEKR Krypton 7X, ZEEKR's sales volume reached 27,011 units for three consecutive months, +8% compared to the previous month.

Export growth is steady, accelerating the enrichment of overseas products and channels. The cumulative export sales volume from January to November 2024 was +56% year-on-year to 0.379 million vehicles. In addition to being deeply involved in markets such as ASEAN, the Middle East, Africa, Mexico, and Central Asia, the company strengthened the in-depth layout of its technology and supply chain overseas. Geely International EX5 debuted in the Australian and New Zealand markets in November, and Lynk & Co completed the launch of the brand in Chile, continuously opening up overseas markets. We believe that the company has benefited from the accumulation of a global layout and is expected to further expand its overseas reach.

The vast smart driving 2.0 architecture was launched, and the unplanned intelligent driving solution was implemented at an accelerated pace. ZEEKR has a deep layout in the field of intelligent driving technology, and launched the vast smart driving 2.0 end-to-end Plus architecture, which has the three major advantages of core foresight capabilities, unmapped city NZP, and parking space to parking space pilot D2D. The NZP and D2D functions are scheduled to be fully promoted to users nationwide by the end of 2024 and the second quarter of 2025, respectively. We believe that with the rapid development of ZEEKR's full-stack self-developed smart driving technology, its competitiveness in the field of smart driving is expected to continue to increase.

Profit forecasting and valuation

The profit forecast for 2024 and 2025 remains largely unchanged. The current stock price corresponds to the 2024/2025 price-earnings ratio of 8.0 times/11.9 times. Maintaining an outperforming industry rating and a target price of HK$18.60, corresponding to 10.7 times the 2024 price-earnings ratio and 15.9 times the 2025 price-earnings ratio, with 34.2% upside compared to the current stock price.

risks

There is a risk of trade friction, increased market competition, and the development of the new energy business falls short of expectations.