Geely Automobile (175 HK) Summary
Core Content
Geely Automobile (175 HK) is a leading Chinese automaker with a focus on electric vehicles (NEVs) and international expansion. The company has shown consistent growth in revenue over the years, with a strong emphasis on improving its gross profit margin (GPM) and operating efficiency. Despite a 4Q25 GPM miss, the company's management remains optimistic about its margin outlook, driven by cost reduction efforts, economies of scale, and an improving product mix. The analysts maintain a BUY rating with a target price of HK$25.00, based on a 12x P/E multiple for FY26E.
Main Points
- Sales Growth: Geely has seen steady revenue growth over the years, with a 4Q25 revenue increase of 22% YoY to RMB106bn, slightly higher than the forecast.
- GPM Performance: The 4Q25 GPM was 16.9%, slightly below the forecast of 17.7%, due to component price volatility. However, the analysts expect GPM to rise by 0.8ppts YoY to 17.4% in FY26E.
- R&D and Earnings Quality: R&D expenses increased by 35% QoQ to RMB5.9bn, reflecting a lower capitalization ratio. Management expects the R&D capitalization ratio to continue declining, improving earnings quality.
- Net Profit Forecast: The FY26E net profit is revised down by 3% to RMB19.4bn, while FY27E is raised by 3% to RMB21.7bn, reflecting ongoing cost reduction and improved R&D capitalization.
- Valuation: The target price of HK$25.00 is based on a 12x FY26E P/E. The P/B ratio has been declining, from 2.1 in 2022A to 1.4 in 2027E, indicating potential undervaluation.
- Shareholding: Mr. Li Shufu holds 44.6% of shares, with the rest held by others.
- Market Position: The company is better positioned than peers with its sales growth outlook, cost control, and overseas sales potential.
Key Information
Financial Highlights (FY23A to FY27E)
| Metric |
FY23A |
FY24A |
FY25A |
FY26E |
FY27E |
| Revenue (RMB mn) |
179,204 |
240,194 |
345,232 |
384,228 |
407,506 |
| YoY growth (%) |
21.1 |
34.0 |
43.7 |
11.3 |
6.1 |
| Net profit (RMB mn) |
5,308.4 |
16,632.4 |
16,852.2 |
19,389.8 |
21,660.3 |
| YoY growth (%) |
0.9 |
213.3 |
1.3 |
15.1 |
11.7 |
| P/E (x) |
30.2 |
9.6 |
9.6 |
9.0 |
8.1 |
| P/B (x) |
2.0 |
1.8 |
1.7 |
1.6 |
1.4 |
| Net margin (%) |
4.9 |
5.0 |
5.3 |
5.0 |
5.3 |
| ROE (%) |
19.3 |
18.7 |
18.8 |
18.7 |
18.7 |
Key Risks
- Lower-than-expected sales volume or GPM, particularly from NEV models.
- Sector-wide de-rating.
- Uncertainty in future performance due to market volatility.
Analysts
Stock Data
- Market Cap: HK$183,656.1 million
- Average 3-month Turnover: HK$902.6 million
- 52-week High/Low: HK$20.44 / HK$13.42
- Total Issued Shares: 10,118.8 million
Earnings Summary (4Q24 to 4Q25)
| Metric |
4Q24 |
4Q25 |
YoY Growth |
QoQ Growth |
| Sales volume (units) |
854,378 |
854,378 |
24.4% |
12.3% |
| ASP (RMB) |
123,780 |
123,780 |
-1.6% |
5.6% |
| Total revenue |
RMB105,755 |
RMB105,755 |
22.4% |
18.6% |
| Gross profit |
RMB17,835 |
RMB17,835 |
18.8% |
20.6% |
| Net profit |
RMB3,742 |
RMB3,742 |
4.0% |
-2.0% |
| GPM (%) |
16.9% |
16.9% |
-0.5 ppts |
0.3 ppts |
Earnings Revision (FY25A to FY27E)
| Metric |
New (CMBIGM) |
Old (CMBIGM) |
Diff (%) |
| Revenue (RMB mn) |
345,232 |
344,026 |
0.4% |
| Gross profit (RMB mn) |
57,347 |
58,028 |
-1.2% |
| Operating profit (RMB mn) |
18,838 |
20,817 |
-9.5% |
| Net profit (RMB mn) |
16,852 |
17,408 |
-3.2% |
| Gross margin (%) |
16.6% |
16.9% |
-0.3 ppts |
| Operating margin (%) |
5.5% |
6.1% |
-0.6 ppts |
| Net margin (%) |
4.9% |
5.1% |
-0.2 ppts |
CMBIGM vs. Consensus
| Metric |
CMBIGM |
Consensus |
Diff (%) |
| Revenue (RMB mn) |
345,232 |
339,785 |
1.6% |
| Gross profit (RMB mn) |
57,347 |
56,578 |
1.4% |
| Operating profit (RMB mn) |
18,838 |
17,060 |
10.4% |
| Net profit (RMB mn) |
16,852 |
16,520 |
-3.2% |
| Gross margin (%) |
16.6% |
16.7% |
-0.3 ppts |
| Operating margin (%) |
5.5% |
5.0% |
-0.6 ppts |
| Net margin (%) |
4.9% |
4.9% |
-0.2 ppts |
Conclusion
Geely Automobile is well-positioned for future growth with a strong focus on cost reduction, overseas expansion, and product mix improvement. The analysts maintain a BUY rating with a target price of HK$25.00, based on its expected performance in FY26E and FY27E. Despite a GPM miss in 4Q25, the company's management remains confident in its ability to maintain resilient margins. Key risks include potential lower-than-expected sales and a sector-wide de-rating.
