Investment Rating - The report maintains a "Buy" rating for Geely Automobile [2] Core Views - Geely's wholesale sales in August reached 181,000 units, up 18.7% year-on-year and 20.2% month-on-month, with cumulative sales from January to August at 1.288 million units, a 31.3% increase year-on-year [2] - The company's new energy vehicle (NEV) sales in August were 75,484 units, representing a year-on-year increase of 59.6% and a month-on-month increase of 27.8%, with a penetration rate of 41.7% [2] - Geely's product cycle is strong with the upcoming launches of the Zeekr 7X and Lynk & Co Z10, expected to accelerate the transition to NEVs and enhance profitability [2] - Export sales reached a record high in August, with 45,045 units exported, a year-on-year increase of 82.3% [2] - The company is projected to achieve revenues of 224.78 billion, 268.69 billion, and 298.83 billion RMB for 2024, 2025, and 2026 respectively, with net profits of 15.4 billion, 12.2 billion, and 15.8 billion RMB [2] Summary by Sections Sales Performance - August wholesale sales were 181,000 units, with NEV sales at 75,484 units, achieving a penetration rate of 41.7% [2] - Cumulative sales for the first eight months reached 1.288 million units, completing 64.4% of the annual target of 2 million units [2] Product Launches - The Zeekr 7X SUV is set to launch on September 20, with a starting price of 239,900 RMB, featuring advanced comfort and smart technology [2] - The Lynk & Co Z10, the first pure electric model from Lynk & Co, is available for pre-order with a starting price of 215,800 RMB, launching on September 5 [2] Export Strategy - Export sales in August were 45,045 units, with a cumulative total of 275,000 units for the year, focusing on markets in Southeast Asia, Korea, Europe, and the Middle East [2] - Zeekr is targeting the high-end European market, with plans to expand into Western Europe by 2026 [2] Financial Projections - Revenue projections for 2024-2026 are 224.78 billion, 268.69 billion, and 298.83 billion RMB, with net profits of 15.4 billion, 12.2 billion, and 15.8 billion RMB respectively [2] - Earnings per share (EPS) are forecasted at 1.53, 1.21, and 1.57 RMB for the same period [2]

Revenue and Profit Growth - Revenue for the six months ended June 30, 2024, reached RMB 107,305.45 million, a significant increase from RMB 73,181.75 million in the same period in 2023[16] - Gross profit for the period was RMB 16,220.89 million, up from RMB 10,540.49 million in 2023[16] - Profit before tax surged to RMB 10,939.92 million, compared to RMB 1,474.10 million in the previous year[16] - Net profit attributable to equity holders of the company was RMB 10,597.87 million, a substantial rise from RMB 1,570.73 million in 2023[16] - Net profit for the six months ended June 30, 2024, reached RMB 10,383,610 thousand, a significant increase from RMB 1,273,508 thousand in the same period of 2023[17] - Total comprehensive income for the period amounted to RMB 10,396,943 thousand, compared to RMB 1,185,698 thousand in the previous year[17] - Revenue from contracts with customers under HKFRS 15 increased to RMB 107,305,450 thousand in the first half of 2024, up from RMB 73,181,745 thousand in the same period of 2023, representing a 46.6% year-over-year growth[30] - Sales of automobiles and related services contributed RMB 87,479,658 thousand, accounting for 81.5% of total revenue, with a 45.1% increase compared to the previous year[30] - Revenue from a major customer (Customer A) increased to RMB 16,131,081 thousand in 2024, up 35.5% from RMB 11,904,647 thousand in 2023[33] - Revenue from battery packs and related parts grew to RMB 9,324,178 thousand in 2024, a 56.6% increase from RMB 5,954,587 thousand in 2023[30] - Total revenue (excluding Lynk & Co joint venture) increased by 47% year-on-year to RMB 107.3 billion, with average revenue per vehicle rising by RMB 4,000 to RMB 105,000[154] - Net profit attributable to equity holders of the company reached RMB 10.6 billion, a year-on-year increase of 575%, with diluted earnings per share of RMB 1.04[155] Asset and Liability Changes - Property, plant, and equipment increased to RMB 27,448,564 thousand as of June 30, 2024, from RMB 27,350,540 thousand at the end of 2023[18] - Intangible assets rose to RMB 26,327,992 thousand, up from RMB 23,919,814 thousand at the end of 2023[18] - Trade and other receivables in current assets decreased to RMB 35,355,175 thousand from RMB 42,710,734 thousand at the end of 2023[18] - Bank balances and cash increased to RMB 41,487,826 thousand, up from RMB 35,745,963 thousand at the end of 2023[18] - Total equity attributable to the company's shareholders grew to RMB 89,624,643 thousand from RMB 80,508,824 thousand at the end of 2023[19] - Non-current liabilities, including trade and other payables, increased to RMB 2,863,971 thousand from RMB 2,721,668 thousand at the end of 2023[19] - Bank borrowings in non-current liabilities rose to RMB 3,320,400 thousand from RMB 2,840,240 thousand at the end of 2023[19] - The company's equity attributable to owners of the parent as of June 30, 2023, was RMB 81,203,571 thousand, showing an increase from RMB 76,195,815 thousand at the beginning of the year[20] - The company's total assets as of June 30, 2023, stood at RMB 76,569,089 thousand, with liabilities amounting to RMB 51,214,084 thousand[20] - The company's total equity attributable to non-controlling interests was RMB 4,634,482 thousand as of June 30, 2023[20] - The company's equity attributable to owners of the parent company increased to RMB 88,624,643 thousand as of June 30, 2024, compared to RMB 80,508,824 thousand at the beginning of the year[21] - The company's total assets increased to RMB 96,177,997 thousand as of June 30, 2024, compared to RMB 85,151,498 thousand at the beginning of the year[21] - The company's total liabilities increased to RMB 6,553,354 thousand as of June 30, 2024, compared to RMB 4,642,674 thousand at the beginning of the year[21] - The company's retained earnings increased to RMB 61,425,948 thousand as of June 30, 2024, compared to RMB 53,612,890 thousand at the beginning of the year[21] - The company's total equity increased to RMB 88,624,643 thousand as of June 30, 2024, compared to RMB 80,508,824 thousand at the beginning of the year[21] - Total cash reserves (including bank balances, cash, and restricted bank deposits) reached RMB 44.4 billion as of June 30, 2024, up from RMB 38 billion at the end of December 2023[156] - The company's total borrowings decreased by 13% to RMB 5.3 billion as of June 30, 2024, compared to the end of December 2023[157] Cash Flow and Financing Activities - Operating cash flow from operating activities increased to RMB 14,151,902 thousand in the first half of 2024, up from RMB 10,698,972 thousand in the same period of 2023[22] - Net cash used in investing activities was RMB 10,070,599 thousand in the first half of 2024, compared to RMB 8,986,314 thousand in the same period of 2023[22] - Net cash from financing activities was RMB 548,896 thousand in the first half of 2024, a significant improvement from a net cash outflow of RMB 2,206,223 thousand in the same period of 2023[22] - Cash and cash equivalents at the end of the period increased to RMB 41,487,826 thousand, up from RMB 32,847,813 thousand at the end of the first half of 2023[22] - The company issued RMB 1,517,719 thousand from the issuance of Zeekr ordinary shares during the first half of 2024[22] - The company received RMB 3,000,000 thousand in advances from an associate during the first half of 2024[22] - The company repaid RMB 3,650,000 thousand to an associate during the first half of 2024[22] - Net cash generated from operating activities reached RMB 14.2 billion in the first half of 2024, driven by increased sales volume and improved gross margin[179] - Total capital expenditure for the first half of 2024 was RMB 7.0 billion, primarily due to increased R&D investment in new energy and intelligent transformation[179] - Zeekr raised approximately $480.9 million (RMB 3.47 billion) through its IPO in May 2024, with the group subscribing to 12.9 million ADS worth $270.9 million (RMB 1.96 billion)[179] - The group's total cash level increased by 17% to RMB 44.4 billion as of June 30, 2024, compared to December 31, 2023[179] - Total borrowings decreased to RMB 5.3 billion as of June 30, 2024, from RMB 6.1 billion on December 31, 2023[179] Investments and Joint Ventures - The company holds a 35% stake in Hanlai Wando (Ningbo) Automotive Chassis System Technology Co., Ltd., which focuses on manufacturing key automotive chassis components and electronic devices[50] - The company acquired a 49.9% stake in Proton Holdings Berhad and DRB-HICOM Geely Sdn. Bhd., providing entry into the Southeast Asian right-hand drive passenger vehicle market[53] - The company sold its 45% stake in Chongqing Ruilan Automotive Technology Co., Ltd. for RMB 504 million, recognizing a gain of RMB 166,295,000 in the first half of 2024[54] - The company's stake in Wuxi Xingqu Technology Co., Ltd. was diluted from 27.6% to 24.15% due to a capital injection of RMB 300 million by other investors, resulting in a gain of RMB 5,791,000[55] - Renault Korea paid a total dividend of at least 63 billion KRW (approximately 328 million CNY) to CIL for the fiscal years ending December 31, 2022, and 2023, meeting the minimum dividend guarantee requirement[56] - Proton Group's net assets as of June 30, 2024, were 7,089,235 thousand CNY, a decrease from 7,634,175 thousand CNY as of December 31, 2023[57] - Renault Korea's net assets as of June 30, 2024, were 8,727,373 thousand CNY, a decrease from 9,472,695 thousand CNY as of December 31, 2023[57] - Proton Group's revenue for the six months ending June 30, 2024, was 7,159,483 thousand CNY, compared to 2,699,271 thousand CNY for the period from April 28, 2023, to June 30, 2023[58] - Renault Korea's revenue for the six months ending June 30, 2024, was 7,613,867 thousand CNY, a decrease from 10,512,043 thousand CNY for the same period in 2023[58] - The company's share of profit from joint ventures for the six months ending June 30, 2024, was 239,848 thousand CNY, compared to 227,158 thousand CNY for the same period in 2023[60] - The company's investment in non-listed joint ventures as of June 30, 2024, was 23,685,537 thousand CNY, a significant increase from 7,305,706 thousand CNY as of December 31, 2023[61] - The company holds a 75% stake in Geely Auto Finance Co., Ltd., which has a registered capital of 4,000,000,000 CNY[63] - The company holds a 50% stake in Lynk & Co Automotive Technology Co., Ltd., which has a registered capital of 7,500,000,000 CNY[63] - The company holds a 33% stake in Horse Powertrain Limited, which has a registered capital of 6,000,000,000 EUR[63] - Lynk & Co Group's net assets as of June 30, 2024, were RMB 6,696,084 thousand, a decrease of 1.6% compared to RMB 6,804,559 thousand as of December 31, 2023[65][67] - Geely Auto Finance's net assets as of June 30, 2024, were RMB 8,740,444 thousand, an increase of 8.3% compared to RMB 8,071,740 thousand as of December 31, 2023[65][67] - Lynk & Co Group reported a loss of RMB 246,377 thousand for the six months ended June 30, 2024, compared to a loss of RMB 660,691 thousand for the same period in 2023[66] - Geely Auto Finance reported a profit of RMB 668,704 thousand for the six months ended June 30, 2024, compared to a profit of RMB 647,938 thousand for the same period in 2023[66] - Lynk & Co Group's revenue for the six months ended June 30, 2024, was RMB 21,297,276 thousand, an increase of 70.9% compared to RMB 12,462,437 thousand for the same period in 2023[66] - Geely Auto Finance's revenue for the six months ended June 30, 2024, was RMB 2,132,847 thousand, a decrease of 4.3% compared to RMB 2,228,668 thousand for the same period in 2023[66] - The company's joint venture, Yiwu Geely Automatic Transmission Co., Ltd., recorded a purchase of powertrain products amounting to RMB 190,518 thousand and interest income of RMB 5,438 thousand for the six months ended June 30, 2024[135] - The company's joint venture, Baoji Geely Engine Co., Ltd., recorded a purchase of powertrain products amounting to RMB 93,119 thousand for the six months ended June 30, 2024[135] - The company's joint venture, Ningbo Geely Luoyou Engine Parts Co., Ltd., recorded a purchase of powertrain products amounting to RMB 20,619 thousand for the six months ended June 30, 2024[135] - The company's joint venture, Geely Changxing Automatic Transmission Co., Ltd., recorded a purchase of powertrain products amounting to RMB 272,171 thousand for the six months ended June 30, 2024[135] - The company's ultimate holding company, Geely Holding, recorded operating service fees of RMB 26,189 thousand for the six months ended June 30, 2024[135] - The company's financial assets measured at fair value through other comprehensive income (transferable) amounted to RMB 11,717,366 thousand as of June 30, 2024[138] - The company's listed equity investments measured at fair value through profit or loss amounted to RMB 79,504 thousand as of June 30, 2024[138] - The company's foreign exchange forward contracts not designated as hedging instruments amounted to RMB 229,935 thousand as of June 30, 2024[138] - The company's acquisition of assets from Geely Holding Group for the production and R&D of Lynk & Co, Zeekr, and Geely brand vehicles amounted to a maximum cash consideration of RMB 632,800,000[136] - The company's acquisition of assets from Geely Holding Group for the production and R&D of Lynk & Co, Zeekr, and Geely brand vehicles amounted to a maximum cash consideration of RMB 508,500,000[136] - ZEEKR completed the issuance of 134,992,983 Series A preferred shares for a total consideration of $726,416,153 (approximately RMB 5,204,460,000), reducing the company's ownership in ZEEKR from 58.31% to 54.83%[143][144] - ZEEKR's book value increased to RMB 7,739,989,000 after the issuance of Series A preferred shares, with non-controlling interests increasing by RMB 3,897,355,000 and equity attributable to the company's shareholders increasing by RMB 1,307,105,000[144] - In 2024, ZEEKR completed its IPO, issuing 21,000,000 American Depositary Shares (ADS), equivalent to 210,000,000 ZEEKR shares, with the company subscribing to 12,900,952 ADS (129,009,520 ZEEKR shares)[146] - ZEEKR received net proceeds of approximately $209,989,000 (RMB 1,517,719,000) from the IPO after deducting issuance costs and the company's subscription payment of $270,920,000 (RMB 1,956,476,000)[146] - The company's ownership in ZEEKR decreased from 54.73% to 53.63% due to the IPO and the vesting of 45,555,414 ZEEKR incentive shares under the ZEEKR Share Incentive Plan[147] - ZEEKR's revenue for the six months ended June 30, 2024, was RMB 34,740,263, with a loss of RMB 1,002,356, compared to revenue of RMB 21,282,799 and a loss of RMB 808,627 for the same period in 2023[148] - The company issued RMB 2 billion medium-term notes on August 1, 2024, with the proceeds to be used to supplement the working capital of its subsidiary, Geely Automobile[150] - The company sold its 45% equity stake in Chongqing Ruilan for RMB 504 million, recording a gain of RMB 166 million from the transaction[158] - The company established Horse Powertrain, a joint venture with Geely Holding and Renault, holding 33% equity, and later sold 10% of its stake to Aramco Asia Singapore for an undisclosed amount[159][160] - The company invested USD 271 million (RMB 1.956 billion) in Zeekr's IPO, increasing its stake to 53.63% and distributing a special dividend of HKD 75 million (RMB 70 million) to shareholders[161] - The company issued RMB 2 billion in medium-term notes with a fixed annual interest rate of 2.18%, maturing on August 2, 2027[162] - The joint venture with LG Chem, involving an investment of USD 94,000,000 (approximately RMB 682,844,000) by the company, had not been completed as of June 30, 2024[101] - The establishment of Horse Powertrain, a joint venture with Zhejiang Geely Holding Group and Renault, involved the injection of assets worth €2.31 billion, €1.19 billion, and €3.5 billion respectively, with ownership split at 33%, 17%, and 50%[94][96] - As of December 31, 2023, the assets classified as held for sale amounted to RMB 18,648,139,000, with related liabilities of RMB 7,885,018,000[94] - The transaction for Horse Powertrain was completed on May 31, 2024, resulting in a deemed disposal gain of RMB 7,660,446,000 for the company[96] - The net assets sold in the Horse Powertrain transaction were valued at RMB 10,512,859,000 as of May 31, 2024[97] - The company's 33% stake in Horse Powertrain was preliminarily valued at RMB 18,175,311,000[97] - A 10%

Investment Rating - The report maintains a "Buy" rating for Geely Automobile (175 HK) with a target price of HKD 12.50, indicating a potential upside of 58.6% from the current closing price of HKD 7.88 [1][2][7]. Core Insights - Geely's performance in the first half of 2024 met expectations, with revenue reaching RMB 107.3 billion, a year-on-year increase of 46.6%. Vehicle sales grew by 41% to 956,000 units, driven by low base effects from the previous year and strong sales from new models [1][5]. - The gross margin improved to 15.1% from 14.4% in the same period last year, attributed to better product mix and cost control. Operating profit surged by 149.3% year-on-year, supported by significant revenue growth and improved gross margins [1][5]. - The report highlights the upcoming launch of six new energy vehicle models in the second half of the year, which, along with an accelerated export strategy, is expected to further enhance sales performance [2][5]. Financial Summary - For the first half of 2024, Geely's revenue was RMB 107.3 billion, with a gross profit of RMB 16.2 billion, reflecting a gross margin of 15.1%. The net profit attributable to shareholders was RMB 10.6 billion, a staggering increase of 574.7% year-on-year [1][5]. - The report provides a financial outlook, projecting revenues of RMB 210.9 billion for 2024, with a year-on-year growth rate of 17.7%. Net profit is expected to reach RMB 6.5 billion, with earnings per share projected at RMB 0.65 [3][8].

Investment Rating - The report maintains a "Buy" rating for Geely Automobile [4] Core Views - Geely Automobile has reached an operational turning point, with sales driving profit growth [4] - The company reported a revenue of HKD 107.3 billion for H1 2024, a year-on-year increase of 47% [4] - The gross profit margin improved to 15.1%, up 0.7 percentage points year-on-year, with Q2 gross margin at 16.5%, reflecting a quarter-on-quarter improvement of 2.84 percentage points [4] - The company delivered 956,000 vehicles in H1 2024, a 41% increase year-on-year, with new energy vehicle sales reaching 320,000, up 116.9% [4] - Geely's sales in China were 758,000 units, a 35% increase year-on-year, ranking second among domestic brands [4] - The report anticipates the establishment of 3-4 KD factories in H2 2024 to enhance global presence [4] - The company is entering a new vehicle cycle, with several new models expected to launch, which will support further sales growth [4] Summary by Sections Financial Performance - H1 2024 revenue was HKD 107.3 billion, with a net profit attributable to shareholders of HKD 10.6 billion, a significant increase of 574.7% year-on-year [4] - The adjusted net profit, excluding one-time gains, was HKD 3.37 billion, a 114.4% increase year-on-year [4] - The average selling price (ASP) per vehicle was HKD 105,000, a slight increase of HKD 4,000 year-on-year [4] Future Outlook - The report projects revenue growth for 2024-2026, increasing estimates from HKD 217.2 billion, HKD 246.4 billion, and HKD 271.4 billion to HKD 224 billion, HKD 257.5 billion, and HKD 285.3 billion respectively [4] - Net profit forecasts were adjusted from HKD 7.4 billion, HKD 9.1 billion, and HKD 11 billion to HKD 14 billion, HKD 9.5 billion, and HKD 11.6 billion respectively for the same period [4] - The report emphasizes the importance of the profitability of the Galaxy brand and the performance of the Zeekr brand in maintaining competitive advantage in the market [4]

Investment Rating - Buy (Maintained) [2][3] Core Views - 1H24 revenue increased by 46.6% YoY to RMB 107.31 billion, with automotive sales and related services revenue up 45.1% YoY to RMB 87.48 billion [2] - Net profit attributable to shareholders surged 574.7% YoY to RMB 10.6 billion, driven by a one-time net gain of approximately RMB 7.47 billion from the HORSE joint venture [2] - Adjusted net profit attributable to shareholders rose 99.2% YoY to RMB 3.13 billion, in line with expectations [2] - Total sales volume, including Lynk & Co, grew 41% YoY to 956,000 units, with NEV sales up 117% YoY to 320,000 units (34% of total sales) and export sales up 67% YoY to 197,000 units (21% of total sales) [2] - Gross margin improved by 0.7 ppts YoY to 15.1%, driven by scale effects and higher export share [2] - SG&A expense ratio decreased by 0.8 ppts YoY to 12.3% [2] Financial Performance - Revenue growth is projected at 31.4% in 2024E, 16.2% in 2025E, and 11.6% in 2026E [4] - Net profit attributable to shareholders is expected to grow 196.1% in 2024E, decline 35.2% in 2025E, and increase 23.9% in 2026E [4] - ROE is forecasted at 15.75% in 2024E, 9.97% in 2025E, and 11.39% in 2026E [4] - EPS is projected at RMB 1.55 in 2024E, RMB 1.01 in 2025E, and RMB 1.25 in 2026E [4] Product and Market Strategy - Management revised the 2024E full-year sales target upward from 1.9 million to 2.0 million units [3] - Six new models are expected to be launched in 2H24, including Geely (Geely Xingyuan, PHEV SUV), Zeekr (7X, MIX), and Lynk & Co (Z10, compact BEV SUV) [3] - Geely brand focuses on both fuel and NEV paths, with the Galaxy product line expected to gradually improve [3] - Lynk & Co brand emphasizes high cost-performance and export-driven sales growth, with the Z10 BEV sedan starting pre-sales at RMB 215,800 [3] - Zeekr brand has upgraded its main models in intelligent driving, cabin, and three-electric systems, with new models 7X and MIX expected to further enhance the product matrix in 4Q24 [3] Valuation and Target Price - 2024E net profit attributable to shareholders forecast is revised upward by 109.4% to RMB 15.72 billion [3] - Target price maintained at HK$12.03, corresponding to 7x 2024E PE [3] Market Data - Total market capitalization is HK$81.01 billion [5] - 1-year low/high stock price range is HK$7.24/HK$10.76 [5] - 3-month turnover rate is 34.98% [5]

2024Q2 净利超预期 产品周期强势 2024 年 08 月 23 日 ➢ 事件概述：8 月 21 日，公司发布 2024 年二季报：2024Q2 营收 549.9 亿 元，同比+38.6%，环比+5.1%；2024Q2 归母净利 90.4 亿元，同比+954.8%， 环比+478.9%。2024Q2 毛利率 16.5%，同比+1.9pct，环比+2.8%。 ➢ 受益销量同比大增及产品结构优化 营收表现亮眼。收入端：2024Q2 营收 549.9 亿元，同比+38.6%，环比+5.1%，主要受益销量同比大幅提升及产品结 构升级、优化，2024Q2 销量 48.0 万辆，同比+33.4%，环比+0.9%，其中新能 源销量 17.6 万辆，同比+99.4%，环比+22.2%；占比 36.7%，环比+6.4pct； ASP：我们测算 2024Q2 单车 ASP 13.2 万元，同比+0.70 万元（采用收入/（吉 利汽车除领克之外的销量）粗略计算），主要受单价较高的新能源销量占比提升 驱动及整体折扣力度加大综合影响。 ➢ 毛利表现超预期+出售股权非经收益 净利亮眼。利润端：2024Q2 归母净利 90.4 亿元， ...

Investment Rating - The report maintains an "Accumulate" rating for Geely Automobile [1] Core Views - Geely Automobile's Q2 2024 performance shows significant growth in both revenue and profit, with total revenue reaching 54.99 billion yuan, a year-on-year increase of 27.85% and a quarter-on-quarter increase of 4.86% [3] - The company's net profit attributable to shareholders reached 9.04 billion yuan, reflecting a year-on-year increase of 90.52% and a quarter-on-quarter increase of 82.73% [3] - The report highlights the successful transition to new energy vehicles, with a penetration rate of 36.68% in Q2 2024, up 12.14 percentage points year-on-year [3] - Geely's overseas sales have also seen a significant increase, with Q2 2024 overseas sales reaching 110,400 units, a year-on-year increase of 67.81% [5] Summary by Sections Financial Performance - In H1 2024, Geely achieved total revenue of 107.30 billion yuan, a year-on-year increase of 46.63%, and a net profit of 10.60 billion yuan, a year-on-year increase of 574.60% [4] - The average revenue per vehicle (ASP) for H1 2024 was 105,000 yuan, a year-on-year increase of 4.2% [3] Sales and Market Expansion - Geely's total vehicle sales in Q2 2024 reached 480,000 units, a year-on-year increase of 25.06% [3] - The report notes strong sales performance from Geely's high-end brands, with Zeekr and Lynk & Co showing significant growth [3] - The company has expanded its global presence, with sales and service networks established in 76 countries and over 120 new outlets opened in H1 2024 [5] Future Outlook - The report projects Geely's revenue for 2024-2026 to be 189.2 billion, 219.9 billion, and 221.5 billion yuan, with expected growth rates of 6%, 16%, and 1% respectively [6] - The net profit forecast for the same period is 16.43 billion, 11.84 billion, and 15.39 billion yuan, with growth rates of 210%, -28%, and 30% respectively [6] - The report emphasizes the company's strategic focus on high-end products and new energy vehicles, which are expected to drive future growth [5]

Investment Rating - Maintain BUY rating with a target price of HK$14.00, implying a 77.7% upside from the current price of HK$7.88 [2][4]. Core Insights - Geely's 1H24 core earnings exceeded prior forecasts by 18%, driven by a lower R&D capitalization ratio and improved gross margins [2]. - The Galaxy E5 BEV, based on the GEA platform, is expected to drive sales volume and improve margins compared to previous models [2]. - Zeekr's introduction of hybrid models is anticipated to enhance competitiveness in the premium vehicle segment [2]. - The current valuation of Geely is considered attractive, with a projected net profit of RMB4.1 billion for 2H24 and a 12% increase in FY25E net profit to RMB8.7 billion [2][3]. Financial Performance - 1H24 revenue was RMB107.3 billion, slightly below forecasts, with a gross margin of 15.1%, which is 1 percentage point higher than estimates [2][7]. - The net profit for 1H24, excluding certain items, was approximately RMB4 billion, marking an 18% increase over forecasts [2]. - Revenue projections for FY24E have been raised from RMB227.5 billion to RMB227.6 billion, with net profit estimates increasing significantly from RMB7 billion to RMB14.7 billion [7][9]. Sales and Production Outlook - The order backlog for the Galaxy E5 BEV is estimated to exceed 25,000 units, supported by competitive pricing [2]. - Sales volume forecast for FY24E has been increased from 1.98 million units to 2.01 million units [2]. - Geely's total revenue is projected to grow at a CAGR of 27.0% for FY24E, followed by 9.3% and 7.3% for FY25E and FY26E, respectively [3][9]. Valuation Metrics - Zeekr is valued at 0.7x FY25E core revenue, translating to a valuation of approximately US$8.4 billion [2][8]. - Geely's other businesses are valued at a P/E of 12x for FY25E, reflecting a comprehensive valuation approach [2][8]. - The projected P/E ratio for FY24E is 5.0, significantly lower than historical averages, indicating potential undervaluation [9].

Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 12, indicating a potential upside of 52% from the current price of HKD 7.9 [1][3]. Core Insights - The company achieved a record revenue of HKD 107.3 billion in the first half of the year, representing a 47% year-on-year increase, driven by a 41% increase in total sales to 956,000 vehicles [2][3]. - The adjusted net profit for the first half was HKD 3.37 billion, a 114% increase year-on-year, aligning with expectations [1][2]. - The company has raised its full-year sales target from 1.9 million to 2 million vehicles, with new models set to launch in the second half of the year [2][3]. - The introduction of new energy vehicles is expected to enhance profitability, with several new models planned for release, including the Galaxy E5, Zeekr 7X, and Lynk & Co Z10 [2][3]. Financial Performance Summary - Revenue for 2022 was HKD 147.965 billion, with a growth rate of 46%, and is projected to reach HKD 210.6 billion in 2024, with a growth rate of 18% [3][5]. - The adjusted net profit for 2022 was HKD 5.26 billion, with a projected increase to HKD 13.966 billion in 2024, reflecting a growth rate of 163% [3][5]. - Gross margin is expected to improve from 14.1% in 2022 to 15.9% by 2026, while net profit margin is projected to rise from 3.6% to 5.1% over the same period [3][7]. Market Dynamics - The company is positioned to benefit from government policies that enhance demand for new energy vehicles, with subsidies for trade-in programs significantly increased [2][3]. - The company plans to expand its market presence in overseas markets, particularly in Mexico and Australia, while enhancing its product competitiveness through new model launches [2][3].

Financial Performance - Revenue for the six months ended June 30, 2024, reached RMB 107,305,450, a 47% increase from RMB 73,181,745 in the same period of 2023[2] - Profit attributable to equity holders of the company surged to RMB 10,597,868, representing a 575% increase compared to RMB 1,570,728 in the previous year[2] - Basic earnings per share increased to RMB 104.59, up 601% from RMB 14.91 in the same period last year[2] - Total sales volume for the period was 955,730 units, a 41% increase from 677,920 units in the previous year[2] - The company reported a pre-tax profit of RMB 10,939,917, compared to RMB 1,474,100 in the same period last year[5] - Other comprehensive income for the period was RMB 13,333, compared to a loss of RMB 87,810 in the previous year[6] - The pre-tax profit for the six months ended June 30, 2024, was RMB 10,939,917 thousand, a substantial rise from RMB 1,474,100 thousand in the same period of 2023, reflecting an increase of about 642.5%[9] - The company reported a significant adjustment in non-cash items amounting to RMB (3,278,858) thousand for the six months ended June 30, 2024, compared to RMB 4,223,921 thousand in the previous year[9] Assets and Liabilities - Total assets as of June 30, 2024, amounted to RMB 197,017,141, reflecting a 2% increase from RMB 192,597,681 at the end of 2023[2] - Total liabilities as of June 30, 2024, were RMB 10,670,935 thousand, slightly up from RMB 10,622,256 thousand at the end of 2023, showing a marginal increase of about 0.5%[8] - As of June 30, 2024, the total equity amounted to RMB 96,177,997 thousand, an increase from RMB 85,151,498 thousand as of December 31, 2023, representing a growth of approximately 12.0%[8] - Equity attributable to equity holders of the company rose to RMB 89,624,643, an 11% increase from RMB 80,508,824 at the end of 2023[2] - Non-controlling interests increased to RMB 6,553,354 thousand as of June 30, 2024, compared to RMB 4,642,674 thousand at the end of 2023, indicating a growth of approximately 41.1%[8] Cash Flow and Investments - The company’s net cash and cash equivalents stood at RMB 41,487,826 as of June 30, 2024, compared to RMB 35,745,963 at the end of 2023[7] - The cash flow from operating activities before changes in working capital was RMB 7,661,059 thousand for the six months ended June 30, 2024, compared to RMB 5,698,021 thousand for the same period in 2023, reflecting an increase of about 34.4%[9] - The net cash generated from operating activities was RMB 14,151,902 thousand, up from RMB 10,698,972 thousand year-over-year, indicating a growth of approximately 32.3%[9] - The net cash used in investing activities was RMB 10,070,599 thousand for the six months ended June 30, 2024, compared to RMB 8,986,314 thousand in the prior year, representing an increase of about 12.1%[10] - The net cash from financing activities was RMB 548,896 thousand, a significant recovery from a net cash used of RMB 2,206,223 thousand in the same period last year[10] Revenue Sources - Revenue from automobile sales and related services reached RMB 87,479,658, an increase of 45% compared to RMB 60,284,330 in the previous year[16] - Total revenue for the six months ended June 30, 2024, was RMB 107,305,450, up 46.6% from RMB 73,181,745 in the same period last year[16] - R&D and related technical support services generated revenue of RMB 3,274,555, a significant increase of 73.8% from RMB 1,883,870 year-over-year[16] Research and Development - R&D expenses amounted to RMB 2,423,592, significantly higher than RMB 843,808 in the previous year, indicating a focus on innovation[21] - Research and development expenses for the first half of 2024 totaled RMB 4.55 billion, a 52% increase compared to RMB 2.99 billion in the same period of 2023[102][103] - Capitalized product development costs increased by RMB 4.55 billion, primarily related to the development of new energy smart vehicle models[104] Market Performance and Sales - The company achieved total sales of 955,730 vehicles in the first half of 2024, a significant increase of 41% year-on-year, with sales in the Chinese market reaching 758,302 vehicles, up 35%[93] - The average selling price per vehicle increased by RMB 4,000 to RMB 105,000, contributing to a 47% year-on-year increase in total revenue to RMB 107.3 billion[93] - The gross margin improved by 0.7 percentage points to 15.1% despite intensified price competition in the Chinese automotive market[93] - Distribution and selling expenses rose by 33% to RMB 6.33 billion, primarily due to investments in the new energy vehicle brand and export business growth, although the expense ratio decreased by 0.6 percentage points[93] Strategic Initiatives and Future Plans - The company plans to expand its market presence and invest in new product development to enhance competitiveness in the electric vehicle sector[53] - The company plans to launch several new models in the second half of 2024, including the Galaxy E5 and Zeekr 7X, to expand its product lineup[105][106] - The company is actively expanding its market presence in Southeast Asia, the Middle East, and Eastern Europe, while also exploring local partnerships for assembly[112] Corporate Governance and Compliance - The audit committee has been established in accordance with listing rules to review and supervise the financial reporting process, risk management systems, and internal controls[122] - The unaudited interim results for the six months ended June 30, 2024, have been reviewed by the audit committee[122] - The interim report will include all information disclosed in the mid-year performance announcement for the first half of 2024[122]