Qunyi Securities: Geely Auto (00175) is recommended to “buy” ratings and launch a variety of new cars in 2026

The Zhitong Finance App learned that Qunyi Securities released a research report saying that on December 22, Geely Auto (00175) issued an announcement announcing the completion of the privatization of Krypton and delisting it from the New York Stock Exchange. The company completed the transaction by issuing shares (70.8%) and paying cash (29.2%). After the merger, the company's automobile business will be further integrated in R&D, marketing, procurement, etc., and operational efficiency is expected to improve. I recommend buying it.

The main views of Qunyi Securities are as follows:

The company's electrification transformation is accelerating, the cost-effective product strategy has paid off, and there are market-approved products in all mainstream price ranges

The company's automotive business is expected to reduce procurement costs, share technology, and improve overall product competitiveness. Automobile subsidies will continue in 2026, the automobile market is expected to maintain its prosperity, and the company's sales volume can be expected to grow. According to the company's November 18 announcement, the company will repurchase shares after completing the privatization of Krypton. The total amount will not exceed HK$2.3 billion, which is expected to boost stock prices. The bank expects the company's net profit for 2025/2026/2026/2027 to reach 170.6/218.5/28.18 billion yuan, respectively. After deducting the impact of one-time revenue, YOY is +80%/+28%/+29%, and EPS is 1.59/2.04/2.62 yuan, respectively. The corresponding P/E for the current stock price is 9.6/7.5/5.8 times, respectively, and it is recommended to “buy”.

Extreme Krypton has completed privatization, and operational efficiency is expected to improve

On December 22, the company issued an announcement announcing the completion of the privatization of Kykrypton and delisting it from the NYSE. It will become a wholly-owned subsidiary of the company. In this merger, about 70.8% of the holders chose to exchange shares. For this reason, the company allotted or issued 777 million compensatory shares (7.7% of the company's issued share capital); 29.2% of the holders chose cash consideration, and the company will pay 701 million US dollars in cash payments. For this reason, the company will finance no more than 420 million US dollars. The implementation of the privatization of Polar Krypton is an important step in the “One Geely” strategy released by the company in September 2024. After the merger, the company's automotive business will be further integrated in R&D, marketing, procurement, etc., and investment in Krypton R&D will be reduced by 10% to 20%, BOM costs will be reduced by 5% to 8%, capacity utilization will be increased by 3% to 5%, and costs will be reduced by 10% to 20%.

The company's electrification is accelerating, and the product matrix will be further improved in 2026

In 2025, the company's electrification process accelerated. From January to November, the company sold a total of 2.787,800 vehicles, YOY +41.8%; of these, NEV sales volume was 1,533,500 units, YOY +97%, and new energy accounted for 55%, an increase of 14.2 percentage points over the full year of 2024, with NEVs accounting for 60.5% in November. The company's many new energy vehicles are at the top of the market segment. The models that sold over 10,000 in November were Xingwish, Panda, Galaxy E5, Galaxy A7, Starship 7, and Galaxy M9, with sales of 42,000, 17,000, 14,000, 13,000, 12,000 and 10,000 respectively.

The company is expected to launch a variety of new cars in 2026. The Galaxy brand is expected to launch 3 SUVs and 2 sedans in the 150,000-200,000 price range; in terms of the Extreme Krypton brand, the 9X became a hit after launch, and the new large SUV based on the same platform but with a slightly lower price is expected to continue to gain good market attention; the Lynk & Co brand is expected to expand new categories such as station wagons and off-road vehicles in 2026. Furthermore, the company will increase exports of new energy vehicles, which are expected to increase by 50% year on year, accounting for half of the export volume. The bank expects the company to hit 4 million sales in 2026, an increase of nearly 30% over the previous year.

Profit expectations: The bank expects the company's net profit for 2025/2026/2027 to reach 170.6/218.5/28.18 billion yuan, respectively. After deducting the impact of one-time revenue, YOY is +80%/+28%/+29%, and EPS is 1.59/2.04/2.62 yuan, respectively. The corresponding P/E for the current stock price is 9.6/7.5/5.8 times, respectively, and it is recommended to “buy”.