20180710-兴业金融证券-吉利汽车-00175.HK-Strong_1H18_From_June_Sales__5页_257kb

Geely Automobile Summary

Core Content

Geely Automobile reported strong performance in the first half of 2018 (1H18), with June sales reaching 128,449 units, up 45% YoY, driven by high demand for the GL, EC7, and Lynk & Co models. However, the 4% MoM growth was attributed to the seasonally slow summer period. For the first six months of 2018, total sales volume stood at 763,184 units, representing a 44% YoY increase and 49% of the company's full-year target.

Geely is identified as the Top Pick in the auto sector, with the analyst recommending a Buy rating and maintaining a target price of HKD29.00, offering a 46% upside from the current price of HKD19.90.

Main Points and Key Information

1. Sales Performance

• June 2018 Auto Sales: 128,449 units (+45% YoY)
  • GL: +68% YoY
  • EC7: +29% YoY
  • Lynk & Co: +166% YoY (from 0 in June 2017)
• MoM Growth: Only 4% due to seasonal weakness
• 6M18 Sales Volume: 763,184 units (+44% YoY), accounting for 49% of the full-year target

2. Sales Driver Analysis

• No pressure to revise sales targets: The 1.58 million unit target for the full year is unlikely to be adjusted, as the analyst forecasts 1.65 million units (+32% YoY).
• Higher ASP models: GL, GS, and Vision X3 models contributed more to incremental sales in 1H18.
• Cost advantages: Strong sales may enhance bargaining power with suppliers and reduce fixed product line cost and SG&A expenses per car.
• Lynk & Co outperforms WEY:
  • VV5 and VV7: 10,481 units sold in June
  • C01: 9,274 units sold in June
  • Lynk & Co differentiates itself from WEY due to cannibalisation issues with Haval models.

3. Financial Forecasts and Valuations

4. Analyst's View

• Analyst: Zhuang Dan
• Contact: +852 2103 9414 | zhuang.dan@rhubgroup.com
• Rating: Buy (Maintained)
• Target Price: HKD29.00
• Upside: 46% from current price

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Regulatory Disclosures

• Malaysia: Distributed by RHB Research Institute Sdn Bhd.
• Thailand: Distributed by RHB Securities (Thailand) PCL.
• Indonesia: Distributed by PT RHB Sekuritas Indonesia.
• Singapore: Distributed by RHB Research Institute Singapore Pte Ltd.
• Hong Kong: Distributed by RHB Securities Hong Kong Ltd. (RHBSHK).

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