Key Takeaways:
HSBC Global Research raised its target price for Geely Auto (00175.HK) to HKD32 from HKD30, maintaining a 'Buy' rating and citing expectations for sales and profit margin expansion in 2026.
"The launch of new models in China, export growth, and cost synergies from the restructuring of Zeekr and Lynk & Co will support sales and profit margin expansion in 2026," HSBC Global Research said in a report.
The bank's decision follows Geely's fourth-quarter 2025 net profit of RMB3.7 billion, which was slightly above HSBC's expectations. The average selling price increased 6 percent quarter-over-quarter to RMB124,000, supported by a more diversified product mix. The combined sales contribution of Lynk & Co and Zeekr increased to 22 percent in the fourth quarter from 18 percent in the third quarter.
The upgrade suggests a positive outlook for Geely's profitability, with the focus on higher-margin vehicles and cost control being a key driver for the increased target price. The new HKD32 target implies further upside for the stock.
HSBC's positive outlook is also supported by Geely's more diversified product portfolio. The increasing sales contribution from the premium Lynk & Co and electric Zeekr brands is improving the automaker's average selling price and margin profile.
The report highlights that continued export growth and the launch of new models in the competitive Chinese market will be key performance drivers. The restructuring of the Lynk & Co and Zeekr brands is also expected to yield cost synergies, further bolstering profitability.
This price target increase from a major financial institution could provide a tailwind for Geely Auto's stock. Investors will be watching for the successful execution of its new model launches and the realization of the expected cost savings.
This article is for informational purposes only and does not constitute investment advice.
