Company Profile

Geely is one of the leading enterprises in China's self-brand passenger vehicles manufacturers. The Company's products include six major brands: Geely, Geometry, Lynk, Zeekr, Livan, and Galaxy, covering the A0 to C-class passenger vehicles market.

Investment Summary

Strong H1 Results With Core Net Profit Doubling YoY
Geely Auto announced its interim results for 2025. In H1 2025, total revenue reached RMB150.28 billion (RMB, the same below), up 26.5% yoy, marking a record high. Net profit attributable to the parent company was RMB9.29 billion, down 13.9% yoy. Excluding foreign exchange gains, impairment losses, and gains from deemed disposal of subsidiaries in 2024, core net profit attributable to the parent company was RMB6.66 billion, up 102% yoy.

In Q2 alone, the Company reported revenue of RMB77.79 billion, up 28.4% yoy and 7.3% mom. We estimate that core net profit attributable to the parent company, excluding foreign exchange gains and one-off items, was approximately RMB3.18 billion, up 127% yoy and down 8.7% mom.

Slight Decline in Gross Margin, But Lower Expense Ratios
In H1 2025, the Company's overall gross margin declined by 0.3ppts yoy to 16.4%, mainly due to a higher sales proportion of economy NEVs and intensified industry price competition. However, this was partially offset by economies of scale and improved profitability of GEA architecture products. Zeekr's gross margin reached 19.7%, with Q1 and Q2 margins at 18.8% and 20.5%, respectively, reflecting emerging synergies following the February integration of Zeekr and LYNK & CO.

On the expense side, selling expense ratio and administration expense ratio dropped by 1.0ppts and 0.7ppts yoy to 5.6% and 1.9%, respectively, reflecting benefits from economies of scale and channel integration. R&D investment decreased 8.6% yoy to RMB8.35 billion, mainly focused on NEV and intelligent technologies. R&D expense ratio declined by 1.1ppts yoy to 6.6%, indicating synergies from the integration.

Despite a drop in ASP of RMB14 thousand yoy to RMB96 thousand per vehicle, the Company achieved a 37% yoy increase in core net profit per vehicle attributable to the parent company, reaching RMB4,724.

Rapid NEV Sales Growth, Share Exceeding 50%
In H1, the Company's total vehicle sales reached 1,409 thousand units, up 47.4% yoy, significantly outperforming the 13% yoy growth in China's passenger car market. NEV sales totalled 725 thousand units, up 126.5% yoy, accounting for 51.5% of total sales (48.2% in Q1 and 54.7% in Q2). ICE vehicle sales rose 7.5% yoy, showing stable growth. Given strong performance, the Company raised its full-year sales target to 3,000 thousand units, equivalent to an increase from 25% to 38%.

By brand, Geely brand sales totalled 1,164 thousand units, up 56.99% yoy (including 548 thousand units from the Galaxy series, up 232% yoy). Zeekr sales reached 91 thousand units, up 3.3% yoy, and LYNK & CO sales were 154 thousand units, up 22.3% yoy.

Overseas Expansion Continues to Deepen
In H1, the Company exported 184 thousand units, down 7.7% yoy, mainly due to weakness in Eastern European markets. However, NEV exports surged 146% yoy to 40 thousand units. Currently, exports account for only 13% of Geely's total sales, indicating significant room for growth. The Company has established five overseas regions---Europe, Latin America and Africa, Middle East and Asia, ASEAN, and Eastern Europe---to accelerate its internationalisation strategy across organisational structure, resource allocation, after-sales service, and product planning. With models such as the Galaxy E5, Starship 7, and Starwish entering overseas markets in H2, alongside accelerated promotion of premium models like LYNK & CO 08 and Z10, Zeekr 7X and 009, overseas sales are expected to regain strong growth momentum.

Zeekr Privatization Accelerates Strategic Integration
On 15 July, the Company announced plans to privatise and delist Zeekr (ZK.N) from the NYSE, after which Zeekr will become a wholly owned subsidiary. Zeekr shareholders can choose between USD2.687 per share or 1.23 newly issued Geely Auto shares per Zeekr share. The Company will pay up to USD2.399 billion or issue up to 1.089 billion Geely Auto shares, equivalent to 11% of the current share capital.

The Zeekr privatization is a key step in Geely's return to its "One Geely" strategy, signalling a shift from multi-brand expansion to centralised operations. The consolidation aims to enhance strategic synergy and business integration among sub-brands, eliminate internal competition, reduce redundant investments, complement sales networks, and improve supply chain efficiency to drive cost reduction and efficiency gains. Going forward, the Company is expected to continue benefiting from technological synergies and cost optimization.

In 2025, the Company plans to launch 10 new models, including 5 under the Galaxy brand, 3 under Zeekr brand, and 2 under LYNK & CO brand. The already launched Starshine 8, LYNK & CO 900, and Zeekr 007GT have received positive market feedback, showing strong potential to become blockbuster models. Noteworthy launches expected in H2 include the Galaxy A7 and M9, Zeekr 9X and 8X, and LYNK & CO 10EM-P. These, together with growing momentum in overseas markets driven by new model rollouts, are expected to drive performance in the second half.

Investment Thesis

We revised our financial forecast and target price to HK$24.3, equivalent to 14.4/12/9.6x P/E ratio in 2025/2026/2027, and we give the rating of Buy. (Closing price as at 25 August)

Geely’s P/E Band trend

Source: Wind, Company, Phillip Securities Hong Kong Research

Risk Factors

1) Progress of new production line is below expectations;
2) Electric power tools sales fall short of expectations;
3) Macroeconomic downturn affects product demand;
4) Sharply rising raw material prices or sharply falling product prices.

Financial Data

(Closing price as at 25 August 2025)

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