Key investment points

Fuel vehicle sales bucked the trend. There is little resistance to the transition from fuel vehicles to the plug-in hybrid market. Fuel vehicle sales in China have declined year by year since 2017, but Geely Automobile's fuel vehicle sales bucked the trend in 2023, with a year-on-year growth rate of 8.6%. The company's basic fuel vehicle market is stable, and there is little resistance to the transition from fuel vehicles to the plug-in hybrid market.

The electrification layout opens up sales space, and a strong NEV product cycle kicks off the company actively lays out the NEV market on the basis of stable fuel vehicle sales. In the second half of this year, the company released several new NEV brands. The Galaxy E5 and Xingyuan both sold more than 0.015 million vehicles in October, and the market popularity is impressive.

Actively plan to go overseas, and the share of export sales is increasing year by year

Geely completed the acquisition of Volvo as early as 2010. From 2019 to 2024, Geely Automobile's share of export sales increased year by year. In 2023, Geely Automobile's annual export sales volume was 274,101 vehicles, an increase of more than 38% over the previous year; in 2024, the company exported 197,428 vehicles, an increase of 67% over the same period last year, accounting for 20.7% of the company's total sales volume. As of June 30, 2024, the company's three major brands have a presence overseas.

The platform architecture optimizes the entire value chain from conceptual design, R&D to manufacturing, Geely Automobile's different power types with different platform architectures. The layout of the diversified power system platform architecture enables Geely to achieve full coverage and higher efficiency in the product matrix.

Profit forecasting and valuation

Geely Automobile is a leading domestic car company. We expect the company to achieve total revenue of 229.3, 279.5, and 338.5 billion yuan in 24-26, +27%, 22%, and 21% year-on-year; net profit to mother of 14.2, 11.5, 13.6 billion yuan, +167%, -19%, 18% year-on-year, corresponding to current PE 9.73, 12.04, and 10.19 times the current PE. Considering that the company will enter the new car release cycle starting in the second half of the year, the company's new energy model market is quite popular, giving the company a “buy” rating.

Risk Alerts

New car sales fell short of expectations, automobile price competition intensified, and automobile exports fell short of expectations.