China Merchants Securities International: Raised the target price for GEELY AUTO (00175) to 32 Hong Kong dollars. The company is currently significantly undervalued.

CMB International Securities released a research report stating that the internal integration of GEELY AUTO (00175) is progressing smoothly, and the medium to long-term growth momentum is strong. The impact of the expansion of the share capital will be reflected in the next year. The valuation is moved to the 2026 fiscal year, and the target price is raised by 16% from HK$27.5 to HK$32, equivalent to a forecast P/E ratio of 16.4 times for the 2026 fiscal year, close to the company's historical average valuation of 16 times. They maintain a "buy" rating. Considering the strong product cycle of the company, the bank raised the annual sales volume forecast for the fiscal years 2025-2027 by 11%, 11%, and 10% to 3 million, 3.66 million, and 4.2 million vehicles, respectively. They also raised the core net profit forecast for the same period (excluding one-off and exchange rate factors) by 9%, 8%, and 10%. The bank believes that the company's high growth and low valuation make it the industry's top recommendation. The report mentioned that on July 15th, the company signed a merger agreement with Jixiang, acquiring all the remaining shares of Jixiang. After the privatization of Jixiang is completed, it will delist. The bank estimates that the pre-IPO investors of Jixiang are mostly industrial funds or strategic cooperative enterprises. Considering the current high growth of Hong Kong-listed companies but low valuations, they are likely to choose to exchange shares to obtain better value enhancement opportunities. There are only a few investors who choose cash after the listing, so the impact on Geely's cash position is minimal. The company recently upwardly revised its annual sales target to 3 million vehicles, demonstrating confidence in the company's long-term development. The bank believes that the company still has the possibility of exceeding expectations and achieving the sales target of 3 million vehicles.