Morgan Stanley: GEELY AUTO (00175) will see accelerated sales growth in the second half of the year, maintaining an "Overweight" rating.

Morgan Stanley has released a report stating that GEELY AUTO (00175) achieved a net profit of 4.95 billion RMB in the second quarter, an increase of 38% year-on-year, broadly in line with the bank's and market expectations. During this period, core earnings were 5.1 billion RMB, higher than the 4.6 billion RMB in the first quarter and the 3.2 billion RMB from the same period last year, primarily benefiting from revenue growth, continuous expansion of gross margins, and effective control of operating expenses. Morgan Stanley maintains an "Overweight" rating for GEELY AUTO, with a target price of 28 Hong Kong dollars. In the second quarter, the gross margin improved by 1.3 percentage points year-on-year. Morgan Stanley believes this mainly reflects an increase in sales from overseas and the Zeekr brand, which is sufficient to offset higher raw material costs and retail discounts. During this period, core profit per vehicle reached 7,200 RMB, marking year-on-year and quarter-on-quarter increases of 59% and 12%, respectively. There are expectations that the recently launched new models will accelerate sales growth in the second half of the year, coupled with the group's push towards premiumization and an increase in overseas sales, which is expected to drive gross margins and profits to new highs in the second half of the year.