Geely Automobile Holdings Ltd

00175: XHKG (HKG)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	HK$71.00	Kmmnd	Sxqnbthz

A Better Year for Geely With Strong Model Lineup; Zeekr Remains Investors’ Key Focus

Vincent Sun

Mar 24, 2022

We reduce our fair value estimate to HKD 13.60 from HKD 16.70 after no-moat Geely reported weaker-than-expected 2021 results. We reduce Geely's 2022-23 net profit forecasts by 26% and 22%, respectively, but slightly lift our longer-term assumptions to factor in Zeekr’s long-term earnings potential. Thanks to a strong product cycle for this year, we forecast Geely to post a 18.7% 2021-24 revenue CAGR with margin improvement. Our fair value implies a forward 2022 price/earnings ratio of 16 times, which is justified by 27.4% 2021-24 net profit CAGR and in line with its historical average of 15 times.

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