<Earning First Take> Geely Automobile (175 HK): 1H22 net earnings below expectation
- Revenue increased 29% y-o-y to Rmb58.2bn, vs estimates of Rmb53.2bn
- Interim net earnings down 35% y-o-y to Rmb1.55bn; below market consensus of Rmb2.77bn. If excluding share-base payment, adjusted net earnings would have declined by 20% to Rmb2.41bn
- GP margins fell 2.6ppts to 14.6%, primarily due to sharp increase in raw material costs and supply chain disruption
- Operating net cash doubled to Rmb9.8bn in 1H22 on better working capital control
- We expect share price to be under pressure in the near-term. We currently have BUY rating and TP of HK$20
What’s new
Interim revenue increased 29% to Rmb58.2bn, despite vehicle sales slipped c.4% (only Geely brand), which implies better product mix in 1H. Sales of battery pack revenue amounted to Rmb1.7bn (nil in 1H21) and R&D support service revenue jumped 4-folds to Rmb1.8bn.
Total vehicle sales were down 3% y-o-y to 613,842 units, impacted by supply chain disruption and pandemic lockdowns in China.
Lynk & Co interim performance was affected by weaker volume shipment (down 28% to 77,258 units), attributable to narrow product offerings. As a result, both revenue and income fell 13% and 53% to Rmb12.5bn and Rmb193.3m.
The NEV business is still in a ramp up stage and Zeekr posted losses of Rmb760m in 1H (nil in 1H21). For 7M22, Zeekr has achieved total volume sales of about 24,000 units, and its monthly sales is gradually climbing from about 1,800 units in Mar-22 to slightly over 5,000 units in Jul-22.
Interim net earnings were also affected by the non-cash share-based payment and if this item is excluded, adjusted net earnings would have declined by 20% to Rmb2.41bn.
Geely has kept its full-year sales target of 1.65m units, representing growth of 24% from the previous year.
More to follow after the interim results briefing today at 5.30pm today
DBS will be hosting Geely Auto Post 2022 Interim Results Group Conference Call on Tuesday, 23 August at 11:15am. Please register through your sales contact if you are interested to participate in this event.
