It’s always complicated when it comes to Geely Automobile (OTCPK:GELYF) (OTCPK:GELYY), and I believe that complexity has had a negative impact on sentiment over the years. With the recent launch of yet another brand through a joint venture structure with parent company Geely Holding (“ParentCo”), it’s only getting worse, and the collaboration with the Volvo (OTCPK:VOLAF) brand, also owned by ParentCo, doesn’t really simplify matters either.
The earnings miss for the second half of the year doesn’t trouble me overly much, and I believe many investors will look at it as a “throwaway year” given the impact of the pandemic. I’m less excited about the ZEEKR venture, though, and while Geely continues to perform pretty well in China’s auto market, these latest moves raise fair questions about ParentCo prioritizing itself over Geely shareholders.
These shares have been exceptionally weak over the last month since my last update. While many other electric car plays sold off during that time, Geely hasn’t recovered to same extent so far. The valuation here is still attractive for long-term shareholders, but the complexity of the Geely-ParentCo relationship and the risks of self-dealing to the detriment of shareholders are risks to consider.
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