Core Insights - The company reported a revenue of 150.285 billion yuan for 1H25, a year-on-year increase of 40%, while the net profit attributable to shareholders was 9.29 billion yuan, a year-on-year decrease of 12% [1] - In 2Q25, revenue reached 77.79 billion yuan, reflecting a quarter-on-quarter increase of 41% and a year-on-year increase of 7%, while net profit dropped 60% year-on-year to 3.62 billion yuan, primarily due to one-time gains in the previous year [1] Performance Trends - Total sales volume surged by 47% year-on-year to 1.409 million vehicles in 1H25, driving a 40% increase in total revenue [1] - New energy vehicle sales soared by 126% year-on-year to 725,000 units, accounting for 51.5% of total sales, with the Galaxy brand sales increasing by 232% to 548,000 units [1] - Exports of new energy vehicles also performed well, rising by 146% year-on-year to 40,000 units [1] - The company plans to launch six new models in the second half of the year, aiming to exceed total sales of 3 million vehicles for the year [1] Profitability and R&D - The gross margin for 1H25 decreased by 0.3 percentage points to 16.4%, mainly due to intensified competition in domestic terminal prices, although profitability from GEA architecture models mitigated some price pressures [2] - The company achieved a 21.3% year-on-year increase in R&D investment to 7.33 billion yuan, focusing on advanced driving assistance systems and new architecture development [2] - Core operating profit for 1H25 increased by 102% year-on-year to 6.66 billion yuan, indicating a trend of profit recovery [2] Strategic Initiatives - The company is advancing its "One Geely" strategy to enhance brand integration and resource synergy [2] - Global expansion efforts include investments in Renault Brazil to leverage its production and distribution networks in the Latin American market, as well as the commencement of operations at its Egypt factory and trial production at its Indonesia base [2] - The company plans to launch new products equipped with advanced driving technologies, covering a range from budget to luxury markets [2] Earnings Forecast and Valuation - The company maintains its earnings forecasts for 2025 and 2026, with the current stock price corresponding to 10.8 times and 9.8 times the earnings for those years [3] - The target price is set at 26.00 HKD, implying a potential upside of 37.2% based on the projected earnings multiples for 2025 and 2026 [3]

Core Viewpoint - The report from CICC maintains the profit forecast for Geely Auto (00175) for 2025 and 2026, with a target price of HKD 26.00, indicating a potential upside of 37.2% from the current stock price [1] Group 1: Sales and Revenue Growth - In 1H25, Geely Auto achieved total sales of 1.409 million units, a year-on-year increase of 47%, driving total revenue to CNY 150.29 billion, up 40% year-on-year [2] - The sales of new energy vehicles (NEVs) surged by 126% to 725,000 units, accounting for 51.5% of total sales, with the Galaxy brand's sales increasing by 232% to 548,000 units [2] - NEV exports also performed well, rising by 146% to 40,000 units, and the company plans to launch six new models in the second half of the year to push annual sales beyond 3 million units [2] Group 2: Profitability and R&D Investment - The gross profit margin in 1H25 was 16.4%, with the GEA architecture models enhancing profitability and offsetting some pricing pressures [3] - The company reduced its sales and management expense ratios by 1.1 percentage points and 0.7 percentage points to 5.6% and 1.9%, respectively [3] - R&D investment increased by 21.3% to CNY 7.33 billion, focusing on advanced driving assistance systems and new architecture development, with core operating profit showing a 102% year-on-year increase to CNY 6.66 billion [3] Group 3: Strategic Reconfiguration and Globalization - Geely is accelerating its "One Geely" strategy for brand integration, enhancing resource synergy across multiple brands [4] - The company is expanding globally by investing in Renault Brazil to leverage its production and distribution network in the Latin American market, while also launching production in Egypt and trial operations in Indonesia to strengthen local supply chains [4] - The product strategy emphasizes full-scale intelligence, with new models featuring advanced driving solutions set to cover the market from entry-level to luxury segments [4]