The Chinese automaker, Geely, has recently garnered overweight rating from Morgan Stanley, signaling a positive outlook amidst macro and industry uncertainties. In the increasingly competitive new energy vehicle market in China, automakers are compelled to lower prices and enhance features to stay afloat. Despite the challenges, Geely is seen as a beneficiary of market consolidation, with limited exposure to the EU and strong potential for overseas expansion.
Growth and Development
Established in 1997, Geely has made significant strides in China’s auto industry, particularly after acquiring Volvo in 2010. Through its subsidiaries like Polestar, Lynk & Co, and Zeekr, the company has expanded its market presence both domestically and internationally. Geely’s efforts have paid off, as it climbed to the third position in market share in China last year, surpassing long-standing players like Volkswagen’s joint ventures.
Geely’s innovative approach is evident in its development of the “Aegis Short Blade Battery,” a lithium iron phosphate battery that boasts durability and safety. This technological breakthrough not only supports the company’s EV production but also opens opportunities for secondhand sales and long-term sustainability. By increasing the share of new energy vehicles to 32% this year, Geely is aligning itself with the industry trend towards NEV transition.
Despite fluctuations in the market, Geely has continued to demonstrate growth and profitability. Quarterly revenue surged by 56% year over year, reaching 52.32 billion yuan, while profit attributable to shareholders more than doubled. The company’s resilient financial performance reflects its ability to navigate economic uncertainties and maintain profitability, as highlighted by Morgan Stanley analysts who set a price target above the current market value.
Future Prospects
Looking ahead, Geely is poised for further growth, with expectations of a 22% increase in sales this year. The company’s strategic focus on new energy vehicles and technological innovations positions it for long-term success in the evolving automotive landscape. By leveraging its diverse portfolio of brands and continued investment in R&D, Geely is well-positioned to maintain its competitive edge and drive future profitability.
Geely’s journey in the Chinese automobile market is a testament to its resilience, innovation, and strategic vision. As it navigates through market challenges and embraces technological advancements, the company continues to solidify its position as a key player in the industry. With a strong foundation, a culture of innovation, and a focus on sustainability, Geely is poised to shape the future of mobility and redefine the automotive experience for years to come.