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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