Investment Summary

We believe that Geely will continue to be benefited from the dividends generated by successful strategies. The Company shows advantages in epitaxial leapfrog development and export market. Several times of increases in the management`s holdings also demonstrate its considerable confidence. In terms of valuation, we increase the profit forecast, adjusting our target price to HK$36, equivalent to 18/13 P/E ratio in 2018/2019, and we shall give the rating of Buy. (Closing price as at 16 May 2018)

Growth of sales volume in April remains strong

The total sales volume of Geely in April increased by 49% yoy and 6% mom to 128,817 units, which is far higher than 9.6% of the industry average. The sales volume and export volume in the Chinese market increased by 47% and 187%, respectively. In the first 4 months of 2018, the total sales volume rose by 41% yoy to 515,000 units, completing 33% of the annual sales volume target (1,580,000 units).