GEELY AUTO (00175): Mid-term growth in both volume and price improves simultaneously, "One Geely" drives high-quality growth.

Determining whether an automotive company is of high quality can be straightforward, as illustrated by the saying, A fierce wind reveals the strength of the grass. Specifically, in a stage where the industry has entered a phase of existing competition and faces multiple adverse factors, the ability to achieve resilient growth through comprehensive advancement in globalization, premiumization, and intelligent development indicates a quality automotive company. This is evidenced in GEELY AUTO's (00175) disclosed mid-year performance and sales data for 2026. Domestic Sales Champion for the Half-Year: Simultaneous Growth in Volume, Price, and Profit According to data from the China Association of Automobile Manufacturers, the wholesale volume of domestic passenger cars (including exports) in the first half of 2026 was 12.72 million units, a year-on-year decline of 6%, indicating overall pressure on industry demand. Despite external environmental pressures, GEELY AUTO achieved total sales of 1.423 million units in the first half of the year, a year-on-year increase of 1%. According to the Passenger Car Association, the company was the domestic sales champion for passenger cars during the first half of the year, being the only domestic car company to exceed one million units in sales during this period. Notably, GEELY AUTO also achieved a 1% sales growth that drove a 15% year-on-year increase in revenue to 173.6 billion yuan (RMB), marking the sixth consecutive year of positive revenue growth. On the profit side, after excluding the effects of exchange gains and losses and impairment of non-financial assets, the core net profit attributable to the parent company reached 9.684 billion yuan, a substantial year-on-year increase of 46%. In contrast, among the seven leading automotive companies that recently disclosed their half-year performance forecasts, two reported nearly halved profits, and five recorded losses. Contrasting data reflects a shift in Geely's growth model. In an industry environment where many are resorting to price-for-volume strategies, Geely carved out a development path of simultaneous growth in volume, price, and profit. In the first half of the year, the company's overall sales gross profit margin improved to 17.9%, with average sales revenue per vehicle increasing to 112,000 yuan. On the expense side, management expenses saw a slight year-on-year increase of 1% to 2.93 billion yuan, while the management expense ratio decreased by 0.2 percentage points year on year, reflecting the effectiveness of the One Geely strategy in enhancing resource utilization efficiency through business integration. Meanwhile, the large-scale expansion of overseas channels resulted in a mere 0.1 percentage point year-on-year increase in sales expense ratio, showcasing the economies of scale brought about by brand integration and channel reuse. Enhanced operational efficiency magnified per-vehicle profitability, with the company's core net profit attributable to the parent company per vehicle rising by 45% year on year to 6,806 yuan. The net cash flow generated from operating activities during the period reached 19.9 billion yuan, a year-on-year increase of 32%; the end-of-period cash reserves reached 69.6 billion yuan. Based on its solid operational quality, GEELY AUTO actively rewards its shareholders. In the first half of the year, the company repurchased shares totaling 1.885 billion Hong Kong dollars and declared a dividend of 0.5 Hong Kong dollars per share on July 30, a year-on-year increase of 51.5%, with total dividends amounting to 5.39 billion Hong Kong dollars, maintaining a core profit dividend payout ratio exceeding 30% for five consecutive years. In the secondary market, investors continue to cast trust votes for GEELY AUTO. Since the beginning of 2026, the company has received increased holdings or new positions from 46 institutions in the first half of the year. Data shows that as of August 14, southbound funds held 1.207 billion shares of GEELY AUTO, accounting for 11.12% of the shares. Recently, several domestic and international investment banks have issued positive ratings. Notably, CICC maintained a beat sector rating for GEELY AUTO and set a target price of 30 Hong Kong dollars, corresponding to 12.6 times/10.1 times P/E for 2026/2027, indicating an upside potential of 60.7%. The One Geely system enhances efficiency, and the four major brands collaborate to solidify the foundation. The positive feedback from the capital market essentially reflects a pricing of the company's strategic integration capabilities and growth prospects. Leveraging the deep integration of the One Geely system, the four major brandsZEEKR, Lynk & Co, Galaxy, and China Starachieve a collaborative differentiation: each targets a different price range and customer group, enabling differentiated competition at the front end while sharing R&D, procurement, and supply chain resources at the back end, effectively avoiding issues such as duplicated investment and internal consumption that can easily occur during the transition to new energy. It is noteworthy that ZEEKR has already become a profit pillar for GEELY AUTO. In the first half of the year, it sold 178,400 units, accounting for only 12.5% of total sales, yet contributing 31.7% of the operating revenue, with an average customer price of around 350,000 yuan. The ZEEKR 9X continues to lead the domestic market for large SUVs priced above 500,000 yuan. In the second half of the year, ZEEKR will launch the ZEEKR 9X Glory, paired with the 009 Glory as two flagship ultra-luxury models, with the ZEEKR 9X gradually entering overseas markets, marking the beginning of Geelys high-end globalization. A report by Northeast Research suggests that as ZEEKR completes its privatization and integrates into the listed company, the synergies in R&D and supply chain will gradually materialize; leveraging the high-end product matrix of the 9X and 8X, ZEEKR is expected to gradually release its profit potential. Lynk & Co has broken out of the homogenization trap, primarily focusing on the labels of trendy, sporty, and personalized. In the first half of the year, it sold 144,000 units, using the Lynk & Co 07GT as a pivot to explore the high-end niche market; overseas, the brand collaborates with Volvo for operations in Europe, utilizing existing channels to reduce the costs of trial and error when entering that market. Geely Galaxy serves as the mainstream foundation for new energy vehicles, with nearly 520,000 units sold in the first half of the year. Rather than pursuing a purely domestic low-price volume strategy, it represents a model that solidifies domestic scale while achieving higher profits from overseas versions, forming a strategy of domestic grounding and overseas profit optimization. In the second half of the year, two new high-profit models, the TT and the Battleship 700, will be launched, along with the iteration of existing models, continuously optimizing the profit structure. The fuel vehicle business remains a crucial cash flow anchor for the company. Geelys China Star sold over 580,000 units in the first half of the year, winning the championship in fuel passenger car sales for Chinese brands for ten consecutive years. Facing a shrinking domestic market for fuel vehicles, the company is advancing its i-HEV intelligent hybrid transformation, which has already been implemented in key models such as the Star, StarL, and Emgrand, with a goal of achieving 30,000 units per month for i-HEV models by the end of the year. Notably, this hybrid product is planned for overseas launch in 2027; globally, fuel and hybrid models still account for 60% of the market, and Geely's technological system is expected to open up new growth spaces abroad. A Symbiotic Industry Model for Going Abroad, Creating a New Growth Curve The overseas market has become a robust growth engine for Geely. In the first half of 2026, overseas exports reached 474,200 units, a year-on-year increase of 158%, with the half-year export volume exceeding the total for the entire year of 2025; single-month exports broke through 100,000 units in June and July, and overseas sales ranked third among domestic automotive companies. Based on this unexpected growth performance, Geely raised its annual overseas sales target from 640,000 units to 920,000 units, aiming for one million units. GEELY AUTO's CEO, An Jia-yue, stated during the mid-year performance release that the company's exports exhibited three main characteristics: first in export growth among mainstream car companies, first in growth for new energy exports, and first in growth for Chinese premium brand exports; the company has established a long-term goal that two-thirds of its sales will come from overseas markets in the future. It is worth noting that unlike the heavy asset strategy of building factories abroad commonly adopted by peers, Geely has explored a symbiotic industry model for going global: collaborating with local giants such as Ford, Renault, Proton, and Volvo to jointly leverage their existing production capacity, supply chain, and channel resources. The advantages of this model are significant: it can quickly establish a presence in overseas markets and hedge against operational risks brought by geopolitical conflicts and changes in overseas policies, achieving smoother and more sustainable overseas expansion in the context of de-globalization. The collaboration reached with Ford for its Spanish plant in July is a typical example of this model. GEELY AUTO invested 221 million euros to acquire a 34% stake in Fords Valencia plant, and both parties established a joint venture company for contract vehicle production. Citibank's research estimates that this joint venture model for acquiring production capacity costs only 10% to 20% of what it would cost to build a new greenfield factory abroad; at the same time, it can directly reuse established local supply chains, helping to hedge potential import tariffs for electric vehicles from the EU. This transaction is expected to close in the fourth quarter and will become an important milestone for Geely's localization in Europe. As of now, Geely has put 12 overseas manufacturing plants into operation, with total overseas capacity exceeding 650,000 units, expected to surpass 840,000 units by the end of the year; its sales channels cover 114 key markets, with over 2,000 overseas offline outlets; the R&D teams in Sweden and Germany have completed integration, shortening the time gap for global vehicle launches, facilitating a transition from product going abroad to systematic globalization. High Growth in R&D Investment, Establishing a Leader in AI Smart Vehicles The capital market's valuation logic for automotive companies is undergoing profound changes: simple sales volume is no longer the core of pricing. Self-researched technical reserves and end-to-end intelligent capabilities are gradually becoming the key factors that widen the valuation gap. Geely positions itself as a leader in AI smart vehicles, with the company's technological attributes extending beyond just smart vehicle cockpits to permeate the entire business chain, including design, R&D, manufacturing, and after-sales service. In the first half of 2026, GEELY AUTO invested around 9.2 billion yuan in R&D, an increase of 25.5% year on year. Through high-level R&D investment, the company has established a comprehensive 1+2+N intelligent technology framework: centered around the WAM (World Action Model), supported by the Super Eva intelligent agent and the Qianli Haohan G-ASD intelligent driving system, extending towards multi-dimensional AI capabilities in safety, chassis, and energy. By laying out chips, large models, embodied intelligence with Siasun Robot & Automation, and low-orbit satellites, Geely is one of the few automotive companies in China to achieve multi-stage full-stack self-research. The battery-electric systems have completed vertical integration. Relying on technical entities such as Haosi Power, Jiyao Mobility, and Xingqu Technology, Geely has connected the complete chain from foundational materials to system integration. Self-researched technologies such as the i-HEV intelligent hybrid, Thor AI hybrid 2.0, Shield Gold Brick battery, and Thunder 16-in-1 intelligent electric drive have already been equipped in mass production models. In the second half of the year, an upgraded version of the WAM model and the Qianli Haohan intelligent driving system will be launched, along with an AI off-road architecture and an all-terrain AI digital chassis; a 2030 Laboratory will be established, targeting cutting-edge directions like power semiconductors, embodied intelligence, and large models, reserving disruptive technologies for the future. From an investor's perspective, when a companys growth no longer relies on price competition but stems from product technological iterations, brand elevation, and global systems output, the valuation framework should transcend the traditional PE constraints of manufacturing companies. Currently, Geely's valuation is at a relatively low historical level; as high-end models continue to ramp up production and overseas capacity is gradually released, operational leverage and valuation restoration are likely to resonate. Conclusion From this mid-year performance report, it can be seen that GEELY AUTO is choosing a connotative, sustainable, high-quality development path. Relying on internal system integration, technological iteration, breakthroughs in premiumization, and globalization layouts, Geely has provided a unique answer: rejecting price competition and relying on systemic capabilities to realize value growth. During a deep adjustment period in the industry, the company balances scale and operational efficiency, becoming a typical example of domestic automotive companies transitioning from scale expansion to value growth. Looking ahead, as the efficiency dividends from the One Geely strategy, technological dividends, and brand dividends continue to be released, Geely is expected to participate in global automotive industry competition with a more resilient posture, providing a practical reference for the upward trajectory of Chinese automotive brands.