I've liked Geely (OTCPK:GELYY) (0175.HK) for a while, and I thought the company's refreshed line-up would reignite growth in 2016, but this Chinese auto OEM is doing much better than I'd expected. Sales growth has been well ahead of overall trends in China on the strength of new SUV models like the Boyue and Emgrand GS, and next year will see the first launches of products designed on a joint platform with parent company-owned Volvo.
The Hong Kong-listed shares are up almost 130% since my last update in late February (while the U.S. ADRs do trade, the Hong Kong shares are much more liquid). While the strong market reaction to Geely's new products has led me to significantly increase my fair value since then, I think you have to make some pretty bold assumptions to consider these shares fundamentally undervalued today. A lot could still go right for the company, but the risk-reward balance isn't as favorable as before.
Geely Has Seen The Market Shift From Hesitancy To Hope