Geely (175 HK) New vehicle effect to drive beyond-expectation sales volume in H2 August 11, 2021 205

PSR Recommendation: ACCUMULATE Status: Downgraded
Target Price: HKDHKD30.60

Investment Summary
Efforts in battery parts M&A to ensure future battery supply for long-term and stable
electrification
The Company recently announced that its subsidiary Jirun Automobile will establish a
company with Sunwoda (300207.SZ) and Geely Auto Group, with a registered capital of
RMB100 million. The contribution of the three companies is RMB41.5 million, RMB30 million
and RMB28.5 million, respectively, accounting for 41.50%, 30% and 28.5%, respectively, of
the total. The joint venture will produce HEV (including 48V) power battery packs to meet
the demand of Zhejiang Jirun, Geely Group and their related parties for power battery
products for all their HEV vehicles. After mass production is achieved, the peak annual
production capacity in the first phase shall be at least 600,000 HEV (including 48V) power
battery packs, and that in the second phase shall be at least 800,000 packs.
Sunwoda is a global leader in consumer battery packs, and it engaged in power battery
business early. Up to now, Sunwoda has mass-produced BEV power cell energy density of
244Wh/kg and leading technologies, and has already owned new energy vehicle customers
including Geely, Dongfeng Liuzhou Motor, Renault Nissan, Volvo, EJET, SAIC-GM-Wuling and
XPeng, as well as electric bicycle customers including NIU, Hulong, Meierdun and Aima.
In the first half of 2021, 1206 thousand new energy vehicles were sold in China, a two-fold
yoy increase, flat with that throughout 2019 and accounting for nearly 88% of the 1367
thousand vehicles in 2020. With the increasingly obvious trend of new energy vehicles, the
demand for high-quality power batteries will continue to increase. Geely cooperating with
Sunwoda, put efforts into the power battery sector to guarantee the supply while effectively
reducing the cost of battery in the future.

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.

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