20260610-招银国际-吉利汽车-00175.HK-A_disciplined_route_to_intelligent_transformation_and_global_expansion_5页_620kb

Geely Automobile (175 HK) Summary

Core Content and Key Highlights

Geely Automobile (175 HK) is a leading Chinese automaker undergoing significant intelligent transformation and global expansion. The company has been actively investing in autonomous driving (AD) and smart cockpit technologies, demonstrating progress with its G-ASD 4.0 system and H7 hardware. The company's recent investor day showcased its advancements in integrating R&D resources to catch up with leading peers in these areas. Additionally, Geely is leveraging its asset-light model and partnerships with local automakers to accelerate its global expansion, particularly in Europe.

Main Points

• Investor Day Insights:

  • Geely has made progress in AD and smart cockpit technologies.
  • The current AD system is based on a one-stage end-to-end (E2E) framework, with plans to integrate the Vision-Language-Action (VLA) model onto higher-computing-power SoCs.
  • Super Eva is described as a prototype AI agent utilizing Step 3.5 Flash, capable of integrating AD functions with route planning, real-time interaction, and personalized communication.

• Global Expansion Strategy:

  • Geely continues to beat its year-to-date (YTD) export volume targets.
  • The company is focusing on establishing partnerships in Europe by offering its NEV architecture in exchange for local production capacity.
  • Expected overseas sales volume for FY26E is 1 million units, with a projection of 1.4 million units for FY27E.

• Financial Forecast:

  • The 2Q26 earnings are projected to show a core net profit increase of 14% quarter-over-quarter (QoQ).
  • Revenue is expected to rise by 26% YoY, driven by higher exports and better model mix, potentially leading to a gross margin (GPM) lift of 1.3 ppts YoY to 18.4%.
  • Combined SG&A and R&D ratio is expected to narrow by 0.8 ppts YoY to 12.4%, alongside a forex gain of RMB700mn, leading to a net profit forecast of RMB5.8bn and a core net profit forecast of RMB5.2bn.

• Revised Forecasts:

  • FY26E net profit is revised up by 8.5% to RMB22.7bn.
  • FY27E and FY28E net profit estimates are raised by 10.9% and 9.6%, respectively.
  • The company maintains its BUY rating and target price of HK$27.00, based on a revised P/E of 11x, reflecting weak market sentiment in the China auto sector.

Key Financial Metrics

Metric	FY24A	FY25A	FY26E	FY27E	FY28E
Revenue (RMB mn)	275,910	345,232	418,743	470,977	512,495
YoY growth (%)	54.0	25.1	21.3	12.5	8.8
Net profit (RMB mn)	16,812	16,852	22,670	26,737	28,747
YoY growth (%)	216.7	0.2	34.5	17.9	7.5
EPS (Reported) (RMB)	1.67	1.67	2.07	2.42	2.58
P/E (x)	9.6	9.6	7.7	6.6	6.2
P/B (x)	1.9	1.8	1.6	1.3	1.2
Yield (%)	1.9	2.9	4.5	5.7	6.4
ROE (%)	20.1	18.8	22.2	21.9	20.2
Net gearing (%)	(45.1)	(55.6)	(69.3)	(81.9)	(91.1)

Earnings Summary

Metric	1Q25	2Q25	3Q25	4Q25	1Q26	2Q26E
Sales volume (units)	703,824	705,356	761,009	854,378	709,358	752,801
YoY	6.7%	6.1%	-	-	-	-
QoQ	-	-	-	-	-	-
Total revenue (RMB mn)	72,692	77,593	89,192	105,755	83,776	97,864
Gross profit (RMB mn)	11,446	13,273	14,793	17,835	14,664	18,007
Net profit (RMB mn)	5,673	3,617	3,820	3,742	4,166	5,763
Adj. net profit (RMB mn)	3,480	3,180	3,960	3,790	4,561	5,203
Gross margin (%)	15.7%	17.1%	16.6%	16.9%	17.5%	18.4%
Net margin (%)	7.8%	4.7%	4.3%	3.5%	5.0%	5.9%
Adj. net margin (%)	4.8%	4.1%	4.4%	3.6%	5.4%	5.3%

Earnings Revision

Metric	New (FY26E)	Old (FY26E)	Diff (%)
Revenue (RMB mn)	418,743	403,803	3.7%
Gross profit (RMB mn)	75,791	71,620	5.8%
Net profit (RMB mn)	22,670	20,886	8.5%
Gross margin (%)	18.1%	17.7%	0.4 ppts
Net margin (%)	5.4%	5.2%	0.2 ppts

CMBI Estimates vs Consensus

Metric	CMBIGM	Consensus	Diff (%)
Revenue (RMB mn)	418,743	428,351	-2.2%
Gross profit (RMB mn)	75,791	72,383	4.7%
Net profit (RMB mn)	22,670	20,504	10.6%
Gross margin (%)	18.1%	16.9%	1.2 ppts
Net margin (%)	5.4%	4.8%	0.6 ppts

Analyst Certification

• The research analyst certifies that all views expressed in the report accurately reflect personal views.
• No part of the analyst's compensation is related to the specific views expressed in the report.
• The analyst has not traded in the stock covered in the report within 30 calendar days prior to the report's release and will not trade within 3 business days after the release.
• The analyst does not serve as an officer of any of the Hong Kong listed companies covered in the report and has no financial interests in them.

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 not rated by CMBIGM.
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark.
• UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark.

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• Past performance is not indicative of future performance.
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