CICC: Maintains GEELY AUTO (00175) Outperform Rating, Target Price of HK$30.00

CICC released a research report stating that passenger cars and new energy passenger cars are entering a high prosperity cycle in overseas markets, with high overseas premiums solidifying the profit elasticity of car companies. It continues to recommend Geely Auto (00175), a leading car company with a gradually improving regional layout and steadily increasing export of new energy vehicles. The profit forecast for Geely Auto in 2026 and 2027 remains unchanged. The current stock price corresponds to a 7.8/6.3 times price-to-earnings ratio for 2026/2027. It maintains an outperform industry rating and a target price of 30.00 Hong Kong dollars, corresponding to a price-to-earnings ratio of 12.6 times for 2026 and 10.2 times for 2027, with a 61% upside potential from the current stock price. Key points from CICC are as follows: Geely's export growth is rebounding, with new energy models contributing to core growth With a gradual clarity on the overseas structural adjustment strategy, Geely Auto has begun a new cycle of overseas expansion this year. In the first four months of 2026, the company's cumulative passenger car exports reached 286,000 units, a year-on-year increase of 151%; among them, the export of new energy passenger cars reached 174,000 units, a year-on-year increase of 620%. The penetration rate of new energy vehicles in the company's export business increased from 31.4% in 2025 to 60.8%. The bank believes that Geely's conventional fuel car exports are stabilizing, while new energy vehicles are contributing to incremental growth, with total export sales expected to exceed 800,000 units for the year. Global regional distribution is becoming more balanced, with emerging markets showing accelerated growth The company is reducing its dependence on a single market, accelerating the implementation of the "3+2" strategy in five major overseas markets, including Europe, Eastern Europe, ASEAN, Latin America, the Middle East, and Asia-Pacific. In the first four months of 2026, while the foundation of conventional fuel car sales stabilizes, Geely's main brand saw a year-on-year increase of 736.4% in registrations in ASEAN/Eastern Europe (excluding Russia)/Latin America. Overseas sales channels are expanding, and the company plans to nearly double the number of overseas outlets to 2,200 by the end of 2026. Building differentiation advantages through diverse cooperation The company is accelerating the transformation from exporting single products to localized and systematic operation. On the production front, the company has achieved localized CKD assembly production in Europe, Latin America, ASEAN, and other regions through capital cooperation. On the distribution side, brands like Lynk & Co are leveraging Volvo's mature sales and service network in Europe. Technologically, through the joint venture with Renault's Horse entity, the company is exploring new business models for technology licensing to drive lightweight asset expansion and transformation. The bank is optimistic about Geely's comprehensive collaboration with local partners in production capacity, channels, and after-sales to build competitive differentiation advantages. Risk warning: Overseas geopolitical risks, tariff barriers and changes in overseas market trade policies, intensified competition in overseas markets.