Orient Securities: Maintaining Geely Auto (00175) Purchase Rating Target Price of HK$23.02

The Zhitong Finance App learned that Orient Securities released a research report saying that Geely Auto (00175) is hedging the impact of declining new energy subsidies and accelerating overseas expansion by “combining oil and electricity” (aiming to export 1 million vehicles in 2027). High-end Krypton and Lynk & Co brands have achieved remarkable results. After privatization and integration, it is expected that further synergy effects will be released to support increased profitability. The target price is HK$23.02, maintaining the buy rating.

Orient Securities's main views are as follows:

The company achieved a sales target of 3 million vehicles, with a target sales volume of 3.45 million units in 2026

In December, Geely sold 236,800 units, up 12.7% year on year; of these, sales of new energy vehicles were 154,300 units, up 38.7% year on year; in 2025, total sales volume of Geely was 3,024,600 units, up 39.0% year on year, achieving the annual sales target. Geely plans to sell 3.45 million vehicles in 2026, an increase of 14.1% over the previous year. The bank believes that the two new policies will continue in 2026. Although bicycle subsidies have declined, they are more sustainable. In addition, the company's product matrix continues to improve, and overseas markets are expanding at an accelerated pace. It is expected that the company's sales volume will continue to grow steadily in 2026.

“Combining oil and electricity” to cope with the decline in new energy subsidies in 2026, going overseas will become the company's growth engine

In December, the Geely brand sold 172,800 vehicles, up 10.2% year on year. Among them, Geely Galaxy sold 107,700 vehicles, an increase of 45.0% over the previous year. In 2025, Geely ushered in both fuel vehicles and new energy vehicles. Annual sales of new energy vehicles were 1.687,800 units, up 90.0% year on year; fuel vehicle sales were 1.336,800 units, up 3.8% year on year, achieving contrarian growth. The company is expected to adopt a “combination of oil and electricity” strategy to cope with market competition, which can hedge some of the impact of declining NEV subsidies in 2026. In 2026, the company plans to sell 2.22 million NEVs, an increase of 31.5% over the previous year. In terms of overseas travel, Geely exported 40,300 vehicles in December, up 49.0% year on year; 421,000 vehicles were exported throughout the year, up 1.3% year on year. In 2025, the Geely brand continued to break through in the international landscape, entering 13 new markets including the UK, Italy, and Brazil. The BAMC plant in Egypt and the Indonesian factory have made significant progress. The Brazilian factory cooperating with Renault is expected to localize the production of two new energy models based on the Geely GEA architecture and launch them on the market in the second half of 2026. The company expects overseas sales to increase by more than 50% year-on-year in 2026, and plans to achieve the overseas sales target of 1 million vehicles by 2027. The bank believes that Geely has entered a stage of accelerated overseas expansion, and that brand listing, model introduction, and production capacity layout will continue to advance, and it is expected that going overseas will become an engine for profit growth.

High-end technology continues to gain strength, and extreme Krypton integration unleashes synergy effects

In December, the GKrypton/Lynk & Co brand sold 303/33,800 units, +11.3%/29.4% year over year; in 2025, the GKrypton/Lynk & Co brand sold 22.44,500 units, up 0.9%/22.8% year on year. In December, the Jikrypton 9X delivered more than 10,000 units, and the average bicycle transaction price exceeded 530,000 yuan, becoming the champion in large-scale SUV deliveries of over 500,000; the Lynk Krypton 900 remained the top MPV sales leader of 400,000 or more; the Linker 900 delivered more than 50,000 units in 6 months, with an average price exceeding 335,000 yuan. A key breakthrough was achieved in the high-end development of the Extreme Krypton and Linker brands. The company plans to sell 400,000 vehicles under the Linker brand in 2026, an increase of 14.1% over the previous year; the Krypton brand will sell 300,000 vehicles, an increase of 33.8% over the previous year. Geely Automobile completed the privatization and delisting of Krypton. The bank believes that after this integration, it will give full play to the company's strategic synergy and scale effects, and lay the foundation for the company's brand improvement and profitability.

Profit prediction and investment advice

Net profit attributable to mother in 2025-2027 is estimated to be $170.41, 206.04, and $24.318 billion, respectively, maintaining 11 times the average PE valuation of comparable companies in 26 years, with target prices of RMB 20.79 and HK$23.02 (HK$1 = RMB 0.9032), maintaining the purchase rating.

Risk warning: The risk that the sales volume of Geely, Lynk & Krypton brands falls short of expectations, and that cost control falls short of expectations.