Date of Report: 26 September 2024
Broker: UOB Kay Hian

Overview

Geely (175 HK) has been given a BUY recommendation with a target price of HK$13.00, representing a 23.6% upside from the current price. The report highlights Geely’s strong sales performance, particularly through its Zeekr brand, and its potential for future growth driven by new model launches.

Zeekr’s Strong Sales Performance

In the 38th week of 2024, Zeekr’s insurance registrations grew 31% year-on-year and 27% month-on-month, although they declined 19% week-on-week to 3,800 units. This sales performance is aligned with market estimates, reflecting consistent demand for the brand.

New Model Launches Boost Zeekr

Zeekr is expected to continue its strong sales performance, driven by the launch of new models and the ramp-up of production lines. The brand has recently introduced the Zeekr 009 facelift and the Zeekr 7X, with plans to launch the Zeekr Mix at the end of October 2024. The Zeekr 7X has already received over 20,000 pre-orders in its first week of pre-sales, surpassing the report’s initial forecasts.

Galaxy’s Sales Performance

Geely’s Galaxy brand experienced a 25% month-on-month and 14% week-on-week drop in sales during the 38th week of 2024, with 5,000 units sold. Despite this decline, the year-on-year sales spike was driven by the E5 model, which debuted on 3 August 2024.

Financial Forecasts

Geely’s net profit forecasts for 2024-2026 are maintained at RMB8.98 billion, RMB11.26 billion, and RMB13.50 billion, respectively. These forecasts are based on expected sales volumes of 2.00 million, 2.35 million, and 2.70 million units over the same period. Geely is poised for strong long-term growth, supported by its expanding model lineup and production capabilities.

Conclusion

Geely’s Zeekr brand is leading the company’s growth in the electric vehicle market, with new models driving increased sales momentum. Despite short-term fluctuations in Galaxy’s sales, the company’s strong financial outlook and strategic new product launches make it a compelling investment opportunity.