Investment Rating - Maintain OUTPERFORM rating with a target price of HK$27.45 [2][4][12] Core Insights - The company achieved a revenue growth of 27% YoY in H1 2025, reaching Rmb150.28 billion, slightly above market expectations, with vehicle sales increasing by 47% YoY to 1.409 million units, resulting in a market share of 10.4% [5][13] - The company aims to narrow the market share gap with the industry leader to less than 4% and ultimately overtake them [5][13] - The gross margin for H1 2025 was reported at 16.4%, a slight decrease of 0.3 percentage points YoY [5][13] - The net cash position stood at Rmb38.91 billion, indicating a strong liquidity position [5][13] Financial Performance - The reported net profit attributable to shareholders was Rmb9.29 billion, down 14% YoY, but core net profit surged 102% YoY to Rmb6.66 billion [5][14] - Selling and administrative expenses (SG&A) saw a significant reduction, with the selling expense ratio at 5.6% and administrative expense ratio at 1.9%, reflecting improved efficiency from brand integration [5][14] - R&D spending decreased by 8.6% YoY to Rmb8.35 billion, with the R&D-to-revenue ratio at 5.6% [5][14] Strategic Developments - The merger with Zeekr is on track, pending shareholder approvals, aiming to streamline operations and enhance efficiency [6][15] - Post-merger, the company will focus on four distinct brands: Geely Auto, Geely Galaxy, Zeekr, and Lynk & Co, with a strategy to accelerate new model launches in H2 2025 [6][15] - The company emphasizes a shift towards fair and high-quality growth in the automotive market, moving away from price wars [6][15] Product Pipeline - Key new launches in H2 2025 include: 1. Galaxy A7, launched in August, targeting the Rmb100k PHEV sedan segment [7][16] 2. Galaxy M9, a flagship PHEV SUV expected in Q3 [7][16] 3. Galaxy Xingyao 6, a compact PHEV sedan launching in Q4 [7][16] 4. Zeekr 9X, set to launch in Q3 as a new tech flagship [7][16]

Core Viewpoint - The company reported Q2 2025 revenue of 77.79 billion yuan, with year-on-year and quarter-on-quarter growth of 28.4% and 7.3% respectively, while net profit attributable to shareholders was 3.62 billion yuan, showing a decline of 60.0% year-on-year and 36.2% quarter-on-quarter, indicating overall performance in line with expectations [1] Group 1: Revenue and Sales Performance - The company achieved total sales of 705,000 units in Q2, reflecting a year-on-year increase of 46.9% and a slight quarter-on-quarter increase of 0.2% [1] - The average selling price (ASP) per vehicle was 110,000 yuan, with a year-on-year decrease of 12.6% and a quarter-on-quarter increase of 7.1%, primarily due to price competition and an increase in the sales proportion of lower-priced models [1] - The company expects ASP to improve with the upcoming launch of higher-priced models such as the Zeekr 9X in the second half of the year [1] Group 2: Profitability and Margins - The gross margin for Q2 2025 was 17.1%, with a year-on-year decrease of 0.7 percentage points but a quarter-on-quarter improvement of 1.3 percentage points, attributed to economies of scale and enhanced profitability of new energy products [1] - The overall profit per vehicle was 4,500 yuan (excluding foreign exchange and subsidiary sales impacts), showing significant year-on-year improvement of 64.59% [2] Group 3: Expenses and Other Income - The expense ratios for sales, R&D, and administrative costs in Q2 were 6.1%, 5.1%, and 3.7% respectively, with year-on-year changes of -0.1, -0.4, and +1.0 percentage points, and quarter-on-quarter changes of +1.1, +0.6, and +1.8 percentage points [2] - Other income for Q2 was 1.17 billion yuan, with a year-on-year increase of 156.4% but a quarter-on-quarter decrease of 67.5%, including foreign exchange gains of approximately 450 million yuan [2] Group 4: Future Outlook and Profit Forecast - The company plans to launch several new energy models by the end of the year, including the Galaxy M9 and Zeekr 9X, contributing to an upward revision of the annual sales target to 3 million units [3] - The net profit forecasts for 2025, 2026, and 2027 have been adjusted to 15 billion, 22.1 billion, and 29.5 billion yuan respectively, with corresponding price-to-earnings ratios of 12, 8, and 6 times, maintaining a "buy" rating for the company [3]

Core Viewpoint - The company's Q2 2025 performance aligns with expectations, showing a significant increase in revenue but a decline in net profit due to various factors including pricing competition and changes in product mix [2][3]. Revenue and Profit Analysis - In Q2 2025, the company achieved a revenue of 77.79 billion yuan, representing a year-on-year increase of 28.4% and a quarter-on-quarter increase of 7.3% [2]. - The net profit attributable to the parent company was 3.62 billion yuan, reflecting a year-on-year decrease of 60.0% and a quarter-on-quarter decrease of 36.2% [2]. - The total sales volume for Q2 was 705,000 units, with a year-on-year increase of 46.9% and a quarter-on-quarter increase of 0.2% [3]. Margin and Cost Structure - The gross margin for Q2 2025 was 17.1%, showing a year-on-year decrease of 0.7 percentage points but a quarter-on-quarter improvement of 1.3 percentage points [3]. - The company’s operating expenses for sales, R&D, and administrative costs were 6.1%, 5.1%, and 3.7% respectively, with year-on-year changes of -0.1%, -0.4%, and +1.0 percentage points [3]. Other Income and Profitability - Other income for Q2 2025 was 1.17 billion yuan, with a year-on-year increase of 156.4% but a quarter-on-quarter decrease of 67.5% [3]. - Excluding foreign exchange impacts, the adjusted net profit was approximately 3.17 billion yuan, with a year-on-year increase of 141.8% and a quarter-on-quarter decrease of 9.0% [3]. Future Outlook and Investment Rating - The company plans to launch several new energy vehicle models by the end of the year, including the Galaxy M9 and Zeekr 9X, which are expected to improve the average selling price (ASP) [4]. - The annual sales target has been revised upward to 3 million units, leading to an increase in profit forecasts for 2025, 2026, and 2027 to 15 billion, 22.1 billion, and 29.5 billion yuan respectively [4]. - The company maintains a "buy" rating with projected price-to-earnings ratios of 12, 8, and 6 for the respective years [4].

Investment Rating - The investment rating for Geely Automobile is "Buy" (maintained) [1] Core Views - The Q2 performance of Geely Automobile met expectations, with a strong new vehicle cycle [1] - The company has adjusted its annual sales target to 3 million units due to strong performance in the first half of the year [8] - New models are set to launch, including the Galaxy A7 and several other new energy vehicles, which are expected to improve average selling price (ASP) [8] Financial Summary - Total revenue for Q2 was 77.79 billion yuan, with a year-on-year increase of 28.4% and a quarter-on-quarter increase of 7.3% [8] - Net profit for Q2 was 3.62 billion yuan, showing a year-on-year decrease of 60.0% and a quarter-on-quarter decrease of 36.2% [8] - The company achieved total sales of 705,000 units in Q2, with a year-on-year increase of 46.9% [8] - The ASP for vehicles was 110,000 yuan, with a year-on-year decrease of 12.6% [8] - Gross margin for Q2 was 17.1%, with a year-on-year decrease of 0.7 percentage points [8] - The company expects to achieve net profits of 15 billion yuan, 22.1 billion yuan, and 29.5 billion yuan for 2025, 2026, and 2027 respectively [8] Earnings Forecast and Valuation - The earnings per share (EPS) for 2023, 2024, 2025, 2026, and 2027 are projected to be 0.53 yuan, 1.65 yuan, 1.49 yuan, 2.20 yuan, and 2.93 yuan respectively [1] - The price-to-earnings (P/E) ratios for the same years are projected to be 33.26, 10.62, 11.79, 7.98, and 5.98 respectively [1] - The company’s total revenue is expected to grow from 179.85 billion yuan in 2023 to 511.66 billion yuan in 2027, reflecting a compound annual growth rate (CAGR) of approximately 16.15% [1]