UOB Kay Hian
Date of Report: Friday, 15 August 2025

Geely Automobile Holdings: Profits Soar on EV Boom, Target Price Raised to HK\$42 – Strong Product Pipeline and Margins Drive Bullish Outlook

Overview: Geely Delivers Robust 2Q25 Results, Outlook Brightens

Geely Automobile Holdings Ltd (HK: 175) continues its impressive run in 2025, reporting a 2Q25 core net profit surge of 105.5% year-on-year to Rmb3.2 billion, in line with expectations. The company’s revenue and margins benefited from a 47% year-on-year increase in sales volume and ongoing margin expansion. UOB Kay Hian reiterates its BUY call and raises the target price to HK\$42.00, reflecting confidence in Geely’s strong product cycles, premiumization strategy, and global expansion.

Stock Data and Performance Snapshot

• Share Price (as of report): HK\$18.95
• Target Price: HK\$42.00 (previously HK\$35.00)
• Upside Potential: +121.6%
• Market Cap: HK\$190,580m (US\$24,433m)
• Shares Issued: 10,057 million
• Major Shareholder: Mr. Li Shufu (57.98%)
• 52-week High/Low: HK\$20.90 / HK\$7.57
• 3-month Average Daily Turnover: US\$170.0m
• FY25 NAV/Share: HK\$7.42
• FY25 Net Cash/Share: HK\$5.12

2Q25 Financial Performance: Strong Growth Across Key Metrics

Geely’s 2Q25 core net profit reached Rmb3.2 billion (+105.5% YoY, -8.2% QoQ), driven by a 47% YoY increase in sales volume and improved margins. Total revenue climbed to Rmb77.8 billion in 2Q25 (+28% YoY, +7% QoQ), reflecting robust demand and an expanding product lineup. The reported net profit for 2Q25 was Rmb3.6 billion, affected by high base effects from earlier exceptional gains.

Margin Trends and Financial Metrics

• Gross margin in 2Q25 edged up 0.2 percentage points YoY to 17.1%, slightly dipping 1.6 points QoQ due to an increase in sales of lower-priced models and reduced forex gains.
• EBIT margin rose 2.6 percentage points YoY but dipped 4.7 points QoQ to 4.5% in 2Q25, compared to a full-year assumption of 5.1%.

Growth Drivers: Product Cycle, Sales Mix, Overseas Expansion, and Brand Consolidation

Strong Product Pipeline

• Geely is launching five plug-in hybrid electric vehicle (PHEV) models by end-2025, including the highly anticipated Galaxy A7 sedan, Galaxy M9 SUV, Zeekr 8X SUV, Zeekr 9X SUV, and Lynk & Co 10 EM-P.
• The Galaxy A7, priced between Rmb81,800 and Rmb117,800, received over 30,000 pre-sale orders within half an hour, highlighting strong market demand for its high fuel efficiency and value proposition.
• Galaxy A7 is expected to contribute around 20,000 units in monthly sales, accounting for 7-8% of Geely’s total sales volume.
• Presale of the flagship Galaxy M9, a six-seat SUV with AI capabilities, is set to commence on 23 August.

Sales Volume and Growth Outlook

• 2025-2027 sales volume estimates are maintained at 3.0 million, 3.6 million, and 4.3 million units respectively, implying a 25% compound annual growth rate (CAGR).
• This aligns with management’s 2025 sales target of 3.0 million units (+38% YoY), driven by an expanding product range and new energy vehicle launches.

Sales Mix Optimization

• Premium models such as Galaxy M9, Zeekr 9X, Lynk & Co 900, and Lynk & Co 10 EM-P are expected to boost Geely’s average selling price (ASP) and margins.

Overseas Market Penetration

• 1H25 export volume dropped 7% YoY due to a pullback in the Russian market and restructuring of overseas sales channels.
• Geely expects export volume to grow 30% HoH in 2H25, targeting full-year exports of 427,000 units (+11% YoY).
• Export growth will be supported by dealership expansion and overseas model launches, such as Galaxy Starship 7, Galaxy A7, and Galaxy Sterry 8.

Brand Portfolio Consolidation

• The integration of Zeekr and Lynk & Co, ongoing since 4Q24, aims to streamline brand positioning, avoid cannibalization, and improve cost efficiency in R&D, procurement, and manufacturing.
• The newly formed Zeekr Group (including Lynk & Co) reported a net loss of Rmb1.1 billion in 1H25, a sharp improvement from a net loss of Rmb7.7 billion in 2024, and recorded its first-ever net profit of Rmb280 million in 2Q25.

Key Financial Forecasts and Metrics

Cash Flow and Balance Sheet Highlights

• Operating cash flow is projected to increase from Rmb26.5 billion in 2024 to Rmb40.6 billion in 2027.
• Strong net cash position: Net debt/(cash) to equity ratio is forecast to improve from -39.6% in 2024 to -62.7% in 2027.
• Dividend payments are set to rise, with a projected yield of 4.1% by 2027.

Valuation and Recommendation

• UOB Kay Hian maintains a BUY rating and raises the target price from HK\$35.00 to HK\$42.00, applying a 23x target PE multiple, in line with Geely’s historical average.
• The current valuation discount versus peers is expected to narrow as Geely executes on electrification and intelligentization strategies.

Risks and Earnings Revisions

• UOBKH maintains earnings forecasts for 2025-2027: Net profit at Rmb16.19b (2025), Rmb16.56b (2026), and Rmb20.35b (2027).
• Core net profit forecast is Rmb13.89b (2025), Rmb16.56b (2026), and Rmb20.35b (2027), representing a 29% CAGR.
• Net profit per vehicle assumptions are kept at Rmb46,000 (2025/2026) and Rmb47,000 (2027), reflecting scale benefits and sales mix optimization.

Conclusion: Geely Well-Positioned for Sustained Outperformance

Geely Automobile is capitalizing on its strong EV and PHEV pipeline, strategic brand consolidation, and margin-enhancing premiumization. Coupled with global expansion and robust financials, Geely is well-positioned for continued earnings growth and market outperformance. With a raised target price and clear catalysts ahead, the stock remains a top pick in China’s dynamic auto sector.