Geely Automobile (175 HK) Summary
Core Content
Geely Automobile has been upgraded to BUY from Hold by CMB International Global Markets (CMBIGM), citing positive developments in its new energy vehicle (NEV) segment, particularly the Zeekr brand. The upgrade is based on the expectation that Zeekr will achieve its 2022 sales target of 70,000 units and that its sales volume is projected to double in FY23E, aided by a new compact SUV. This growth is expected to boost NEV sales to about 40% of total sales in FY23E.
The company is also anticipated to benefit from increased PHEV (Plug-in Hybrid Electric Vehicle) sales, with a forecast of 0.2mn units in FY23E, including Lynk & Co models. The analysts believe that Geely could take market share from BYD, which currently holds a dominant 2/3 share in the PHEV segment.
Key Financial Projections
| Metric |
FY20A |
FY21A |
FY22E |
FY23E |
FY24E |
| Revenue (RMB mn) |
92,114 |
101,611 |
143,630 |
157,650 |
167,000 |
| YoY Growth (%) |
-5.4 |
10.3 |
41.4 |
9.8 |
5.9 |
| Net Profit (RMB mn) |
5,534 |
4,847 |
4,708 |
5,567 |
7,027 |
| EPS (RMB) |
0.56 |
0.48 |
0.46 |
0.54 |
0.68 |
| YoY Growth (%) |
-32.4 |
-12.4 |
-2.9 |
18.2 |
26.2 |
| P/E (x) |
18.0 |
20.5 |
23.6 |
19.8 |
15.7 |
| P/B (x) |
1.6 |
1.4 |
1.5 |
1.4 |
1.3 |
| Yield (%) |
1.2 |
0.8 |
1.1 |
1.3 |
1.7 |
| ROE (%) |
9.4 |
7.3 |
6.6 |
7.4 |
8.6 |
Key Points
- Zeekr Performance: Zeekr is on track to meet its 2022 sales target, with a projected doubling of sales in FY23E. It is valued at HK$109bn for 100% ownership, which is higher than Xpeng's current market cap.
- PHEV Strategy: Geely's PHEV sales (including Lynk & Co) are expected to reach 0.2mn units in FY23E, with a new compact SUV likely to improve performance compared to previous models.
- Market Share: The analysts believe that Geely is well-positioned to capture market share from BYD, which currently dominates the PHEV segment with a 2/3 share.
- Profitability: Geely's other businesses, including internal combustion engine (ICE) vehicles, Lynk & Co, IP licensing, and R&D services, are expected to maintain stable profitability in FY23E, aided by a larger portion of premium models.
- Net Profit Growth: Net profit is projected to increase by 18% YoY in FY23E, though slightly below prior forecasts due to heightened NEV competition.
- Valuation: The company's overall valuation is based on a SOTP (Sum of the Parts) model. The target price is HK$16.50, with a 36.4% upside from the current price of HK$12.10.
Key Risks
- Lower-than-expected sales volume, especially in the NEV segment.
- Intensified competition in the NEV market.
- Performance of the PHEV segment may not meet expectations.
- Challenges in maintaining gross margin improvements.
Analysts
Stock Data
| Metric |
Value (HK$) |
| Market Cap |
121,235 |
| Average 3 Months Turnover |
789 |
| 52 Weeks High/Low |
24.49/8.30 |
| Total Issued Shares |
10,019 |
Shareholding Structure
| Holder |
Percentage |
| Li Shufu |
43.2% |
| Others |
56.8% |
Share Performance
| Period |
Absolute (%) |
Relative (%) |
| 1-month |
22.0 |
4.0 |
| 3-months |
-23.5 |
-19.5 |
| 6-months |
-24.4 |
-13.0 |
CMBIGM Ratings
- BUY: Stock with potential return of over 15% over next 12 months.
- HOLD: Stock with potential return of +15% to -10% over next 12 months.
- SELL: Stock with potential loss of over 10% over next 12 months.
- NOT RATED: Stock is not rated by CMBIGM.
Important Disclosures
- The report is not suitable for all investors.
- CMBIGM does not provide individually tailored investment advice.
- The value of investments is uncertain and may fluctuate.
- CMBIGM is not a registered broker-dealer in the United States.
- The report is for the use of intended recipients only and may not be reproduced, reprinted, sold, redistributed, or published without prior written consent.
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