Morgan Stanley Resumes Coverage of Geely with Positive Outlook

Morgan Stanley has reinstated its coverage of Hong Kong-listed automaker Geely, assigning an overweight rating based on the company's potential to navigate macroeconomic and industry challenges. The report, released on June 25, highlights the intense competition in China's new energy vehicle (NEV) market, which has compelled manufacturers to lower prices and enhance vehicle features. Analysts believe Geely stands to benefit from market consolidation amid these pressures. Founded in 1997 and known for acquiring Volvo in 2010, Geely has expanded its portfolio to include several subsidiaries, such as Polestar, Lynk & Co., and the recently listed electric car brand Zeekr. Morgan Stanley's analysis indicates that Geely improved its market position, moving from fourth to third place in China last year, trailing only behind a Volkswagen joint venture. The company has also increased its share of new energy vehicles to 32% this year, surpassing competitors like Great Wall Motor. Despite the ongoing transition, the majority of Geely's offerings remain traditional internal combustion engine vehicles. Analysts project a 22% growth in overall sales for Geely this year, although they anticipate a slowdown in growth during the latter half. Morgan Stanley has set a price target of HK$11.20 ($1.43) for Geely shares, reflecting a 27% upside from recent closing prices. The report acknowledges past volatility in Geely's profitability due to investments in NEVs and one-off expenses but expresses optimism for future profit growth driven by increasing sales volumes and potentially reduced losses in its NEV segment.