With Fading Older Models And Chip Shortages, Geely Is Having A Challenging 2021

 

This hasn’t been an easy year so far for Geely Auto (OTCPK:GELYF) (OTCPK:GELYY), as the company has been hit by the well-published shortage in auto semiconductors, a softening Chinese auto sector, and a faster fall-off in sales of older models. The shares have rebounded some since my last update, but the year-to-date performance has still been pretty disappointing, with the roughly 12% decline lagging XPeng (XPEV), BYD (OTCPK:BYDDY) and Great Wall (OTCPK:GWLLY), while outperforming Tesla (TSLA) and Nio (NIO).

I do believe better days are in store for Geely. The company’s newer products continue to outsell the overall Chinese auto market, particularly the Lynk & Co. (“Lynk”) brand, and the company has multiple upcoming new launches that should reenergize sales volumes. I’d also note the well-received launch of the first model under the all-EV Zeekr (or “ZEEKR”) brand. While the Chinese auto market is intensely competitive and the corporate structure of Geely isn’t the best for shareholders, I still believe there are decent return prospects here and this remains a name to consider for investors who want exposure to the Chinese auto market at a reasonable valuation.

 

Read the full article here: 

With Fading Older Models And Chip Shortages, Geely Is Having A Challenging 2021

Weaker Earnings And More Complexity At Geely Hit The Stock

 

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.

Read the full article here: 

Weaker Earnings And More Complexity At Geely Hit The Stock

Geely Back At Cruising Speed And Gaining Share In China's Recovering Auto Market

The downside to following a lot of stocks is that inevitably you have items on your to-do list that just keep sliding down, and such has been the case with Geely Auto (OTCPK:GELYY) (175.HK). Last year was an awful year for auto sales in China (which probably encouraged me to keep pushing it off), but these shares are nevertheless almost 80% higher now from my last write-up, with the company gaining share and putting together a good recent run of above-market volume growth (gaining more share).

Geely has always had its doubters, but the company has successfully transitioned away from being just a maker of lower-end vehicles and has created a viable mass-market platform, with some early successes targeting the lower end of the high-end market with its Lynk & Co ("Lynk") brand. Likewise, Geely has always had bold plans to be a major player in electrification, and the market has taken a lot more notice since the unveiling of the Sustainable Experience Architecture (or SEA) in September of 2020.

There are still plenty of issues and challenges here. The parent company (ParentCo)/listed company (ListCo) structure is confusing at best and creates the potential for self-dealing at worse. To that end, while merging the Volvo (OTCPK:VOLAF) auto business (owned by ParentCo) into Geely ListCo would likely be good for shareholders, there really hasn't been a meaningful discussion of terms. Moreover, the Chinese EV market is exceptionally competitive, with established foreign automakers like Toyota (TM) and Volkswagen (OTCPK:VWAGY), established local players like BYD (OTCPK:BYDDY), and new entrants like Tesla (TSLA) and XPeng (XPEV) all competing for future share.

Today I see Geely as a fairly-priced play on Chinese auto market growth and Geely's own prospects to gain more share and margin leverage. That may sound like damning by faint praise, but with some EV players trading at over 10x '22 revenue "fairly-priced" has some appeal.

Read the full article here: 

Geely Back At Cruising Speed And Gaining Share In China's Recovering Auto Market

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

Geely Trying To Stay Between The Lines In A Turbulent Chinese Market

It has been something of a wild ride for Geely (OTCPK:GELYY) [0175.HK] shareholders since my last update. While the shares are up close to 20% since that last article (which was around the time of its 52-week low), the shares were up more than 60% before this recent 30% sell-off on ongoing concerns about the company’s volumes and margins.

I do still believe that Geely shares are undervalued, and I still believe that Geely is going to emerge from the Chinese auto mosh pit as one of the survivors and leaders of the local industry. I also believe, though, that 2019 is going to be a rocky year with considerable uncertainty over U.S.-China trade relations and their impact on Chinese consumer spending and sentiment. I’d really like to see better sales momentum in Geely’s newer offerings before getting more bullish, though timing entry points for this name has always been challenging, given its relatively controversial status (very wide spreads between high/low price targets and estimates for revenue, EBITDA, and free cash flow).

Read more here:
Geely Trying To Stay Between The Lines In A Turbulent Chinese Market

Geely Hammered As Macro Challenges Trump Company-Specific Positives

China’s Geely Automobile (OTCPK:GELYY) (0175.HK) is unhappily close to erasing two years of progress in the stock market, as the shares have dropped by almost 60% in the last twelve months as China’s eroding passenger vehicle market has finally started hitting the company’s performance. With minimal volume growth expected in 2019 and margin deleverage likely to bite into earnings, Geely’s strong model roster, technological capabilities, and progress on green initiatives likely won’t help much until 2020.

Although I thought the shares looked expensive on cash flow back in late May of 2018, I did not expect Chinese vehicle sales to drop through the floor. The Chinese government has announced that it intends to stimulate consumer spending on cars, but the announcement was short on specifics and the government may well find it hard to make as much of an impact as it would hope. I still see value in what I believe is China’s best domestic automaker, but the risk of further cuts is real and I’d advise waiting to see how the next few months of sales track before trying to buy into this sell-off.

Read more here:
Geely Hammered As Macro Challenges Trump Company-Specific Positives

Geely Still Hard On The Throttle

I've been bullish on Geely (OTCPK:GELYY)(0175.HK) for a while, but China's third-largest domestic car company has surpassed even what I regarded as bullish expectations on my part. The company's new SUV line-up has gone over well with customers, as have new sedans, and Geely's upcoming Lynk brand could take the company to yet another new level. Volume growth continues to blow away underlying market growth in China, sending the local shares up over 100% from my last write-up.

How much further can Geely go? The company's overall share in China is still only around 3%, and its share of domestic brands is still below 10%. Additional sedan launches are slated for this year, as well as significant launches for Lynk in 2017 and 2018.

The health of China's market and the sequential weakness in monthly results are both concerns, as are higher baked-in expectations and the ongoing murkiness in the company's operations vis a vis its parent company. Even so, the company seems to have made meaningful strides in addressing past engineering and marketing challenges and success outside of China could provide an unexpected new driver for growth.

Follow this link for more:
Geely Still Hard On The Throttle

Geely Has Seen The Market Shift From Hesitancy To Hope

I've liked Geely (OTCPK:GELYY) (0175.HK) for a while, and I thought the company's refreshed line-up would reignite growth in 2016, but this Chinese auto OEM is doing much better than I'd expected. Sales growth has been well ahead of overall trends in China on the strength of new SUV models like the Boyue and Emgrand GS, and next year will see the first launches of products designed on a joint platform with parent company-owned Volvo.

The Hong Kong-listed shares are up almost 130% since my last update in late February (while the U.S. ADRs do trade, the Hong Kong shares are much more liquid). While the strong market reaction to Geely's new products has led me to significantly increase my fair value since then, I think you have to make some pretty bold assumptions to consider these shares fundamentally undervalued today. A lot could still go right for the company, but the risk-reward balance isn't as favorable as before.

Read the full article:
Geely Has Seen The Market Shift From Hesitancy To Hope

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.

Read more here:
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.

Follow the link for more:
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.

Read more here:
Geely Automobile Back On The Right Road?

Seeking Alpha: Can Micro-Transport Be A Major Driver For Kandi Technologies?

There's a lot of weirdness around Kandi Technologies (KNDI). These shares have risen more than 50% in the past year and about 340% over the past two years on the sizzle of the company's opportunity and potential in all-electric vehicles (or EVs) within China, even though it has never been particularly successful at selling electric ATVs, go-karts, or other products, let alone passenger autos. Like many Chinese companies, it employs a Byzantine holding company structure, employs a largely unknown auditor, and used a reverse merger to list its shares in the U.S..

On the other hand, this company boasts a joint venture with Geely (OTCPK:GELYY), one of the largest domestic auto manufacturers in China. Together, these companies are addressing a "micro-transport" market in China that could support hundreds of thousands of vehicles without needing to compete directly with the likes of Tesla (TSLA), BYD (OTCPK:BYDDY), BMW (OTCPK:BAMXY), and a host of joint ventures between Chinese domestics and larger global car companies. While working Geely doesn't guarantee the quality of Kandi, it does offer some assurance that there are real products and a real market here. While I think the fair value is far beyond murky and very difficult to quantify at this point, as "opportunity stocks" go, Kandi at least has a good story to tell.

Continue here:
Can Micro-Transport Be A Major Driver For Kandi Technologies?

Seeking Alpha: With Geely Auto, Opportunity Comes Ugly

Sometimes there are good reasons that a stock looks undervalued. In the case of Geely Automobile Holdings (OTCPK:GELYY), you can take you pick as to why analysts or investors may not like the company. The company has a reputation as a low-end manufacturer of cheap cars with dodgy quality, its tie-up with Volvo doesn't really offer much brand value in China, and its earnings quality is definitely lacking.

All of those are, I believe, fair points to flag. What is just as important is to look at what could go right. The company has been investing considerable resources into R&D and has not only closed the quality gap on its domestic peers, it's closing in on foreign JVs. The company is also actively working to refurbish and refresh its line, with a move toward higher-end brands and models. Geely is also the second-largest exporter of cars from Europe and it is my belief that China is not far removed from following in the footsteps of Japanese and Korean car manufacturers in terms of entering Western European and U.S. markets.

Read the full article at Seeking Alpha:
With Geely Auto, Opportunity Comes Ugly