Thursday, July 18, 2019

Geely Hits A Pothole Amid Emissions-Driven Discounting

When I wrote about Geely (OTCPK:GELYY) (0175.HK) in June, I mentioned "a lot of turbulence" in the outlook for the Chinese economy and significant ongoing risks to the outlook for second-half vehicle sales as the Chinese auto sector goes through a brutal correction. Those risks have already come home to roost, with Geely posting a disappointing June sales figure and warning that first half results will miss expectations, while also reducing the full-year sales target.

As my expectations for Geely were already below the sell-side averages, I can't say this news is all that much of a surprise. The big unknown is the extent to which Geely's underperformance was driven by aggressive discounting from rivals and whether the company's line-up of newer models will see better demand in the second half. Management's guidance is not particularly encouraging on that score, and while I do think the shares are undervalued, I don't think investors need to rush to buy into this very turbulent and troubled sector.

Read the full article here:
Geely Hits A Pothole Amid Emissions-Driven Discounting

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