Seeking Alpha: Geely Automobile On A Better Road

Following Geely Automobile (OTCPK:GELYY) (0175.HK) is an interesting experience, as the volatility gives you a lot of opportunities to make buy/sell calls. Back in June of 2015, I thought that Geely's shares could approach $12/ADR as the company started delivering the results of its restructuring and new product launches. The shares did come close to that level before year-end - before concerns about sales momentum, subsidies, the health of the Chinese consumer, and assorted other issues led to a nasty decline.

From an operational standpoint, I think Geely is in better shape than the market valuation suggests. At a minimum, I wouldn't overlook the fact that Geely has shown it can develop new models that are competitive with foreign/JV models. There are definitely valid concerns here, including the corporate structure, the heavy influence of government subsidies, the health of the Chinese economy, and the healthy of the export business, but the shares seem to more than reflect those concerns. If you have an elevated appetite for risk, this could be a name to consider.

While the ADRs do trade from time to time, I would recommend investors consider the far more liquid Hong Kong-listed shares.

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Geely Automobile On A Better Road

Seeking Alpha: Geely Automobile Leveraging A New Approach

I've see-sawed on Geely Automobile (OTCPK:GELYY) in the past and that has worked out pretty well given the up-and-down performance of the company over the last five years. I was pretty positive on Geely back in August, though, and the shares have risen more than 20% since that article, even with a 20% decline from April's highs. I believe the gains in Geely have come on the recognition that the company's efforts to restructure its dealership network and model line-up are solid moves that can produce real benefits down the line.

I believe the share weakness in Geely since April has had a lot to do with weaker overall industry sales performance and the subsequent decision by many industry participants to cut prices. I can't rule out the risk that this slowdown drags Geely's yoy unit sales down, but I think Geely's approach to take a Hyundai and/or Xiaomi-like approach to the Chinese auto market is a good one that can produce better results for years to come. Geely's ADRs should trade closer to $12 in the near term, with further upside potential if the company can truly leverage synergies with Volvo.

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Geely Automobile Leveraging A New Approach

Seeking Alpha: Geely Automobile Back On The Right Road?

I wasn't too keen on Geely Automobile (OTCPK:GELYY) back in December of 2013, and the performance since then hasn't exactly made me regret that call. A stale lineup and poor dealership channel have both contributed to an ugly trend in unit volume, sending the shares down 30% at their worst point since December and down 17% even after a recent rally.

If management were simply fiddling while the business burned, I'd scratch it off my list and pay no further attention to it. Management is addressing many of the company's problems, though, and I'm cautiously optimistic on what these changes could mean for the future. I realize that forecasts of high single-digit revenue growth and low double-digit FCF growth don't exactly echo "cautious optimism", but I think the company's closer collaboration with Volvo, rebranding strategy, and dealership improvements can lead to meaningful improvements. "Can" and "could" are still the operative words here, though, and this is an idea only really suitable for the risk-tolerant investors in the crowd.

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Geely Automobile Back On The Right Road?