Morgan Stanley has reinstated its coverage of Hong Kong-listed Geely, assigning it an overweight rating amid expectations that the Chinese automaker will navigate through current macroeconomic and industry uncertainties successfully.
The landscape of China’s new energy vehicle sector is fiercely competitive, with automakers increasingly needing to drop prices and enhance features to stay afloat. Many companies, including Geely, are also looking to expand internationally to diversify their revenue streams, although recent trade tensions with the U.S. and the European Union have complicated these efforts.
In a recent report dated June 25, Morgan Stanley Asia equity analyst Tim Hsiao and his team noted, “We see Geely as a beneficiary of market consolidation.” The report highlights Geely’s strategic international positioning, noting limited exposure to the EU market except for some plug-in hybrid electric vehicle (PHEV) exports through Lynk & Co, and potential modest expansions for its electric car brand Zeekr.
Geely, which entered China’s auto market in 1997 and acquired Volvo in 2010, has grown to include subsidiaries like Polestar, Lynk & Co., and Zeekr, which recently went public in New York.
According to Morgan Stanley, Geely has improved its position in the Chinese market from fourth to third place last year, trailing only one of Volkswagen’s joint ventures. BYD continues to lead the market, a position strengthened since 2022 following the launch of its innovative Blade battery.
This Thursday, Geely unveiled its own innovation, the “Aegis Short Blade Battery,” a lithium iron phosphate battery it claims surpasses industry safety standards and boasts a potential lifespan of 50 years, enhancing its suitability for secondhand use. Plans are in place to incorporate this battery into its vehicles later this year.
While the majority of Geely’s offerings are still traditional internal combustion engine vehicles, the automaker has increased its production of new energy vehicles to 32% of its total output this year, outpacing competitors like Great Wall Motor.
The analysts at Morgan Stanley are optimistic about Geely’s prospects in the new energy vehicles sector, which they believe will strengthen its long-term market position and profitability. They forecast a 22% increase in Geely’s sales this year, despite expecting a slowdown in the latter half.
Geely typically announces its monthly delivery figures for its electric brands at the end of each month. Just this Friday, the company disclosed its first-quarter results for the first time, revealing a 56% surge in revenue to 52.32 billion yuan ($7.2 billion), year over year, reflecting its robust financial health and growing market influence.
