Geely (175 HK) Electrification Upgrading Is Accelerating April 25, 2022 205

PSR Recommendation: BUY Status: Upgraded
Target Price: HKD14.90

Investment Summary
Sales Volume Underperforms the Industry Average for Multiple Reasons
According to the released sales data, Geely reported a sales volume of 146.4/78.5/101.2
thousand units in Jan/Feb/Mar, -6.36%/+1.63%/+1.14% yoy. In the first quarter of this year,
the cumulative sales volume was 326024 units, down 2.26% yoy. Geely completed 19.8% of
the annual target of 1,650 thousand units.
According to the information released by the CPCA, the sales volume of China’s passenger
cars fell by 4.4% yoy in January, and increased by 27% yoy in February, down by 1.6% yoy in
March. The overall growth of the Geely’s sales volume was below the industry average. We
think that the main reasons are listed as follows: 1) The dilemma of chip shortage (such as
body electronic stability system (ESP) chips) has not been got rid of. 2) The Chinese Spring
Festival holiday in 2022 was earlier than the previous year. 3) With a small proportion of
new energy models, the Company has not fully enjoyed the booming prosperity of new
energy vehicles.
The Sales Volume Increase Mainly Depends on New Energy Products
On a closer look at brands, Geely brand’s sales volume in Jan/Feb/Mar dropped by 6.1%
/3.0%/flat yoy, respectively. In particular, the high-end models of China Star series (Xingrui,
Xingyue, and Xingyue L) recorded a sales volume of 25/14/21.6 thousand units, respectively
in Jan/Feb/Mar, accounting for 17.1%/17.8%/21.35% of the total sales, respectively. The
proportion saw a further increase. The premiumization of Geely brand was steadily
advancing.
In Jan/Feb/Mar, LYNK&CO brand reported a sales volume of 18/11/13.6 thousand units,
respectively, down 28.1%/11.0%/17.2% yoy, respectively. We think that ‘LYNK&CO’, as the
Company’s high-end sub-brand, has a high level of intelligent configuration, which has led to
a more serious shortage of required chips, and the lack of new energy models, are the main
reasons for the poor performance.
‘Geometry’, Geely’s pure electric sub-brand, displayed remarkable performance. Its sales
volume in Jan/Feb/Mar was 10.2/7.7/8.1 thousand units, respectively, up 391%/863%/334%,
respectively. ‘Zeekr’, Geely’s premium pure electric brand, delivered 3,530/2,916/1,795
units in Jan/Feb/Mar. Since its launch, 13.8 thousand units have been delivered
accumulatively. ‘Ruilan’, the battery swap-enabled brand of Geely, sold 1,618/2,008 units in
Feb/Mar, with a cumulative sales volume of 5,309 units this year.
On a closer look at markets, export markets maintained outstanding performance. In 22Q1,
the export sales volume climbed to 27,417 units, up 15% yoy.
On the whole, the Company’s sales volume increase was mainly driven by the sales volume
of new energy products. The proportion of the sales volume of new energy vehicles
continued to expand, rising to 18.5% at one point in February, compared with 12.2% and
14.4% in January and March, respectively.

About the author

Profile photo of Zhang Jing

Zhang Jing
Phillip Securities (HK)

Bachelor Degree in Tongji University of Engineering; Master Degree in East China Normal University of finance. Currently covering the automobile and air sectors. She has years of experience in investment research and is good at combining analysis for the companies with industry prospects.

Get access to all the latest market news, reports, technical analysis
by signing up for a free account today!