吉利汽车（00175）：未来将有更多协同效应

Geely Automobile (175 HK) More synergies to come Target PriceHK$24.00(Previous TPHK$23.00)Up/Downside22.6%Current PriceHK$19.58 Maintain BUY.Geely’s 1Q25 net profit of RMB5.7bn was in line with its previousprofit alert of RMB5.2-5.8bn, while its SG&A expenseswere significantly lowerthan our prior forecast.Thismay have reflected the initial synergies betweenZeekr and Lynk & Co, and we expect more synergies to come after theintegration of different brands, platforms and management. We revise up ourFY25E and FY26E net profit forecast both by 4%. China Auto Ji SHI, CFA(852) 3761 8728shiji@cmbi.com.hk 1Q25cost control better than expected.Geely’s 1Q25 revenue and GPMboth were below our priorexpectation, probably due to the price reductionin early Mar in order tocompete with BYD’s facelifted models.Zeekr’s GPMin 1Q25 was about 3ppts higher than our forecast, as theZeekr 009’s GPMcould be significantly higher than our projection. That also resulted in abetter-than-expected net profit for Zeekr. Total selling and administrativeexpenses in 1Q25 fell 12% YoY and 2% YoY, respectively, despite 25%YoY growth in revenue. That, along withhigher-than-expected governmentgrants, resulted in a 10% beat in its operating profit in 1Q25. Wenjing DOU, CFA(852) 6939 4751douwenjing@cmbi.com.hk Austin Liang(852) 3900 0856austinliang@cmbi.com.hk More synergies to come.It appears to us that Geely’s superb cost controlin 1Q25 has reflected the initial synergies between Zeekr and Lynk & Co.Total savings in procurement costs, SG&A and R&D expenses combinedcouldbeasmuchasseveralbillionRMB,basedonmanagement’sguidance, after the full integration of brands, platforms and management.Should Geely’s share price continue to rise, more shareholders of Zeekr (ZKUS, NR) may convert their shares to Geely’s, which could lower Geely’scash burden to privatize Zeekr.We expect a significant profit increase atZeekr to start from FY26E,whichmeans nowcould be a good timing for theprivatization. Earnings/Valuation.AlthoughGeely’sinventoriesincreasedbyabout156,000 units in the first four months of 2025, Geely’s retail sales volumerose 41% YoYduring the same period. We raise ourFY25E sales volumeforecast from 2.74mn units to 2.8mn units.We also revise up FY25Eforecast for GPM by 0.7ppts to16.1%. Accordingly, we revise up our FY25Enet profit by 4% to RMB15.2bn. We also raiseour FY26E net profit by 4%to RMB16.7bn for two reasons: 1) cost savings from synergies;2) greaterstakes in Zeekr (100% vs. 65.7%)aftertheproposedprivatization. We maintainourBUYratingandraiseourtargetpriceslightly fromHK$23.00 to HK$24.00, based on 15x our FY25E P/E. We change ourvaluation methodologyfrom sum-of-the-parts to P/E, asGeely’sbusinessesare to be moreintegrated. We are of the view that such multiple is justifiedgiven that BYD(1211 HK, BUY)is nowtrading at 21x our FY25E P/E. Source: FactSet Related Report“GeelyAutomobile(175HK)-Economiesof scale lays foundation forFY25 profit”-21Mar2025 Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies that with respect to the securities or issuerthat the analyst coveredin this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s)covered in this research report within 30 calendar days prior to the date of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an officer ofany of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report.CMBIGM or its affiliate(s) have investment banking relationship with the issuers covered in this report in preceding 12 months. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock with potential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broadmarket benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 monthsGlobal MarketsLimited CMB International Address: 45/F, Champion Tower, 3 Garden Road, HongKong, Tel: (852) 3900 0888Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsi