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<Research>BOCI Expects GEELY AUTO (00175.HK) Cost Pressure to Be Manageable, Drops TP to $30, Reiterates Buy Rating
Recommend 9 Positive 14 Negative 8 |
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GEELY AUTO (00175.HK) recorded wholesales of approx. 270,200 units in January, up 1.3% YoY/ 14.1% QoQ each, outperforming the industry average, mainly due to some wholesale volumes being deferred to January for confirmation by the end of 2025 and strong export growth, according to BOCI's research report. The broker expected GEELY AUTO's 4Q25 revenue to achieve good growth driven by sales, but profits may decline QoQ, primarily due to higher year-end expense provisions and potential recall provisions for early Zeeker models equipped with SUNWODA (300207.SZ)'s batteries. Its 4Q25 core net profit is estimated to range between RMB3.5 billion and RMB3.8 billion. Looking ahead to 2026, BOCI believed that GEELY AUTO's cost pressure is manageable, as its annual cost reduction target exceeds 10%, sufficient to offset the rise in various raw material like lithium carbonate, copper, aluminum and memory chips, ensuring single vehicle profitability under the policy-driven price environment stability. Considering the equity dilution effect brought by Zeekr's privatization, the broker dropped its target price to $30, with the current valuation at a discount compared to peers, and rating reiterated at Buy. AASTOCKS Financial News Website: www.aastocks.com |
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