To The Moon

Orient Securities has released a research report stating that Geely Auto (00175) is mitigating the impact of declining new energy vehicle (NEV) subsidies through a "dual-track strategy of internal combustion engine and electric vehicles" while accelerating its overseas expansion, targeting one million exports by 2027. The premium branding of its Zeekr and Lynk & Co marques has yielded significant results, and the potential for further synergy release following Zeekr's privatization is expected to bolster profitability. The target price is set at HK$23.02, with a maintained Buy rating. The key points from Orient Securities are as follows: The company achieved its sales target of 3 million vehicles, with a 2026 target of 3.45 million units. In December, Geely Auto's total sales reached 236,800 units, a year-on-year increase of 12.7%; notably, NEV sales hit 154,300 units, surging 38.7% year-on-year. For the full year 2025, Geely Auto's total sales amounted to 3.0246 million vehicles, a robust 39.0% increase, successfully meeting its annual sales target. Geely plans to sell 3.45 million vehicles in 2026, representing 14.1% growth. The firm believes that with the continuation of supportive policies into 2026, although per-vehicle subsidies may decrease, their sustainability will be stronger. Coupled with the ongoing enhancement of the company's product portfolio and accelerated expansion into overseas markets, Geely's sales are projected to maintain steady growth in 2026. The "dual-track strategy" is deployed to counter the NEV subsidy phase-out in 2026, with overseas expansion becoming a key growth engine. In December, sales of the Geely brand reached 172,800 units, up 10.2% year-on-year. Sales of the Galaxy series specifically contributed 100,700 units, a significant 45.0% increase. The year 2025 witnessed dual growth for Geely in both internal combustion engine vehicles and NEVs. Annual NEV sales soared to 1.6878 million units, a remarkable 90.0% surge, while sales of internal combustion engine vehicles grew against the trend to 1.3368 million units, a 3.8% increase. The company's strategy is expected to partially offset the impact of the NEV subsidy reduction in 2026. For that year, Geely plans to sell 2.22 million NEVs, a 31.5% increase. Regarding overseas markets, Geely exported 40,300 vehicles in December, a 49.0% year-on-year jump; full-year exports totaled 420,100 units, up 1.3%. In 2025, Geely's global footprint expanded significantly, entering 13 new markets including the UK, Italy, and Brazil. Substantial progress was made at its BAMC plant in Egypt and its Indonesian facility. Furthermore, the joint venture plant with Renault in Brazil is slated to begin local production of two NEV models based on Geely's GEA architecture in the second half of 2026. The company anticipates overseas sales growth exceeding 50% in 2026 and aims to achieve an export target of one million units by 2027. The firm believes Geely Auto has entered a phase of accelerated international expansion, with ongoing brand launches, model introductions, and capacity planning, positioning overseas growth as a primary engine for profit enhancement. The push towards premiumization continues, with Zeekr's integration expected to unlock synergies. In December, sales of the Zeekr and Lynk & Co brands reached 30,300 and 33,800 units, increasing by 11.3% and 29.4% year-on-year, respectively. For full-year 2025, Zeekr and Lynk & Co sold 224,100 and 350,500 vehicles, growing by 0.9% and 22.8%, respectively. A key highlight was the Zeekr 9X, which achieved deliveries exceeding 10,000 units in December with an average transaction price surpassing RMB 530,000, making it the delivery champion in the large SUV segment priced above RMB 500,000. The Zeekr 009 consistently led sales in the MPV segment priced above RMB 400,000. The Lynk & Co 09, within six months of its launch, achieved cumulative deliveries of over 50,000 units with an average price exceeding RMB 335,000, marking critical breakthroughs in the premiumization efforts for both brands. The company targets sales of 400,000 units for the Lynk & Co brand in 2026 (up 14.1%) and 300,000 units for the Zeekr brand (up 33.8%). Following the completion of Zeekr's privatization and delisting, the firm believes this integration will fully leverage strategic synergies and economies of scale, laying a solid foundation for brand elevation and enhanced profitability. Earnings forecast and investment recommendation. Net profit attributable to shareholders for 2025-2027 is forecasted at RMB 17.041 billion, RMB 20.604 billion, and RMB 24.318 billion, respectively. Maintaining a comparable company average 2026 P/E valuation of 11x, the target price is set at RMB 20.79 (HK$23.02, based on an exchange rate of HK$1 = RMB 0.9032). The Buy rating is maintained. Risk warnings include potential underperformance in sales for the Geely, Lynk & Co, and Zeekr brands, as well as risks associated with cost control falling short of expectations.