Geely Auto Has Found A New Gear

I don't write about it as often as I'd like to, but Geely Auto (OTCPK:GELYY) (0175.HK) has long been one of my favorite companies and stocks. Although there is a long list of potential reasons to avoid the name, I've been bullish on the company's prospects to drive significant unit volume growth (as well as revenue and profit growth) on the back of new product launches and leveraging a development partnership with Volvo (OTCPK:VLVLY) (which is owned by Geely's parent company).

Since my last write-up, the ADR shares have risen another 50%, outperforming others like Brilliance China (OTCPK:BCAUY), BYD (OTCPK:BYDDY), SAIC, and Great Wall (OTCPK:GWLLF), as the company's rapid share growth has propelled it to sixth place among auto brands in China (and #2 in domestic brands). Valuation today is a little less cut-and-dried than I would like. While Geely's newest launches are performing well, and the company has a number of new vehicles hitting the market this year, the shares are no longer undervalued on a cash flow basis. While EV/EBITDA does still offer some upside, I'd approach Geely with a bit more caution these days.

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Geely Auto Has Found A New Gear