Geely is one of China’s leading automakers, having sold nearly 1.7 million cars in 2023. We maintain a positive outlook on Geely, as its new-energy vehicle (NEV) initiatives continue to demonstrate progress. The NEV-focused brand Galaxy has successfully gained traction since its launch in 2023, while the premium brand Zeekr is steadily increasing its delivery rates. With strong vehicle sales year-to-date, management has raised its 2024 full-year vehicle volume guidance to 2 million units, reflecting a 21% year-over-year growth. The company anticipates a 70% year-over-year expansion in NEV sales. With a robust model lineup from Galaxy and Zeekr, we believe Geely is well-positioned to further enhance NEV penetration, which is favorable for its transition to electrification. The increase in sales volume and declining battery costs may help mitigate pricing pressures amid industry competition. We believe investors may be underestimating the long-term earnings potential of the company’s diverse new energy brands. Near-term catalysts include strong monthly sales momentum from Galaxy and Zeekr, as well as a recovery in profitability.
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