CMBC International: Maintains "Buy" rating on GEELY AUTO (00175) with target price raised to HK$19

CICC International released a research report stating that it maintains a "buy" rating for GEELY AUTO (00175), believing that the adjustment of Lynk & Co is necessary and will at least reduce product cannibalization and cost cutting, along with sales network integration. The bank recalled the company's merger of multiple brands in 2014, with sales increasing by 22%, 50%, and 62% in the following 3 years. The bank raised its target price for Geely from HK$14 to HK$19. The report stated that the company's third-quarter sales of new energy vehicles and profits pave the way for fiscal year 2025. The bank pointed out that Geely's quarterly operating profit exceeded the bank's forecast by 13%, and net profit roughly met expectations after deducting the impairment impact on Lynk & Co. The bank stated that it raised its forecast for Geely's sales volume next year by 18% to 2.38 million units, based on the recent popularity of new energy vehicles. The company's sales of new energy vehicles next year are expected to increase by 51% to 1.32 million units, accounting for 55% of total sales. In addition, Geely management stated that the new energy vehicle business was profitable in the third quarter, and factors supporting next year's gross profit margin are expected to continue. The gross profit margin next year is expected to be 15.6%, even with an increase in sales contribution from new energy vehicles. The bank also raised its profit forecast for the company next year by 43% to 12.4 billion RMB.