In 2Q25, Geely’ revenue QoQ growth of 7.3% outpaced flat sequential sales volumes, while core net profit (excluding post-tax FX gains of RMB450m) slightly pulled back to RMB3.2bn against RMB3.5bn in 1Q25, largely in line. We are optimistic about Geely’s potential to continuously close the gap with current EV leader, driven by sustained domestic market share expansion, upcoming overseas takeoff, and a strengthened leadership in smart EV techs. We keep 2025 net profit forecast largely intact at RMB15bn, while lifting 2026 net income forecast by 13% to RMB20bn to reflect higher volume assumptions for Galaxy and overseas market, as well as positive margin outlook amid the scale expansion and deepening integration of “one Geely” strategy. We deem Geely’s current huge valuation discount (less than 10x 2026E P/E vs. 18-20x P/E) has yet to reflect its potential to challenge BYD’s dominant position in volume/profit scale in the foreseeable future. Reiterate BUY with higher TP of HK$32.00 (15x 2026E P/E).
　　Key Factors for Rating
　　2Q25 revenue slightly beat on stronger product mix across all brands. In 2Q25, total revenue grew by 7.3% QoQ to RMB77.8bn, outpacing the consolidated volume growth that nearly stayed flat QoQ at 705k units, mainly driven by the delivery ramp up of higher-priced new launches and improved product mix across all brands. By details, we see i) lower Geely brand sales mix in consolidated sales volume (81% vs. 84% in 1Q25); ii) rising sales contribution of premium-oriented LYNK 900 that boosted the revenue per vehicle for new ZEEKR brand recovered 8.5% QoQ to RMB210k; iii) sales ramp up of Galaxy Xingyao 8 that aids to ASP expansion for Geely main brand. Looking ahead, we expect Geely to continue the ASP expansion with the addition and delivery ramp up of higher-priced new launches, such as ZEEKR 9X, and Galaxy A7/M9.
　　2Q25 gross margin recovered QoQ but slightly eroded YoY; OPEX overshot projection on higher marketing expenses related to new launches. In 2Q25, gross margin rallied 1.3ppts QoQ to 17.1% thanks to improved product mix along with supply-chain cost reduction on seasonality. But on a YoY basis, 2Q25 gross margin eroded by 0.7ppt mainly dragged by Geely main brand due to lower sales proportion from higher-margin export contribution and aggressive promotion campaign. In addition, OPEX ratio spiked 1.6ppts QoQ as higher marketing expenses were booked in 2Q25 related to several new model launches. During the earnings briefing, the mgmt. expressed confidence that core earnings per unit in 2H25 will continue to improve from RMB4,724 in 1H25. This anticipated uplift looks achievable in our view given the optimised product mix, better scale effect, and ongoing cost savings and synergies from restructuring efforts.
　　Well-thought and distinctive overseas layout with global ecosystem partnerships will drive overseas volume to catch up from 4Q25 and further take off in 2026. During the earnings briefing, Geely’s management has outlined a comprehensive strategy for global expansion ahead, encompassing product development, marketing, distribution channels, and market-specific adaptations. For organisational structure, the company has restructured its global operations into five regional hubs, adopting a flat organisational model that balances global coordination with localised expertise. Meanwhile, Geely’s product strategy would continue to involve exporting both ICEs and NEVs, tailored to regional preferences and accelerated deployment of rich smart EV techs. Although Geely’s export volumes underperformed China’s broader auto export market in 1H25, the company’s strategic pivot toward overseas markets and intensive new launches across all brands for overseas customers starting in 2H25 are expected to drive consistent MoM export growth. Moreover, we believe Geely Holding Group’s extensive global partnership ecosystem will significantly enhance its ability to swiftly penetrate new markets and scale product sales, establishing a distinct competitive advantage over other Chinese automakers. Recently Geely has finalised an agreement with Renault to establish a joint venture in Brazil to leverage Renault’s established local production infra and extensive sales network, providing a reliable foundation for Geely to accelerate expansion in Latin America and amplify brand presence subsequently.
　　To continuously gain market shares in domestic market driven by plenty of new model launches in sub-segments. In 1H25, Geely ranked no.2 and secured 11.44% market share in domestic NEV sales, significantly closing the distance with the existing EV leader (29.48% market share) compared to 2024. This evidenced Geely’s ability to deliver competitive and cost- effective models for the mass market through Galaxy GEA platform, with standout models such as Galaxy E5, Xingyuan, and Xingyao 8. Looking ahead, we anticipate the intensive new launches of Galaxy to effectively address product gaps in key market segments, further boosting Geely’s continuing domestic market gains to overtake current EV giant. The key new models to watch contain Galaxy A7 (3Q25), Galaxy M9 (3Q25), Xingyao 6 (4Q25), Lynk&Co 10 EM- P(3Q25), and ZEEKR 9X (4Q25).
　　Enhanced tech leadership after group-wide consolidation. Geely recently executed a major integration of its intelligent driving units, merging teams from ZEEKR, Geely Research Institute, and Megvii’s autonomous driving arm, Mach- drive (迈驰智行), into a unified entity under Chongqing Qianli Zhixing. This consolidated unit will serve as Geely Automobile’s core AI ecosystem partner, focusing on advanced autonomous driving algorithms, automotive-grade hardware integration, and scenario-specific solutions. we deem the strategic move is expected to streamline resources, enhance computational capabilities, and reinforce Geely’s technological leadership in talent and innovation.
　　Valuation
　　We largely keep our 2025 net income forecast intact at RMB15bn. We revise up our revenue forecast for 2026 by 4% to reflect higher sales volume estimate of 3.5m units, within which we raise projections for Geely Galaxy, but trim forecast for Zeekr brand. Meanwhile, we believe stronger economies of scale, manifesting cost-savings benefits from new ZEEKR integration, and an escalated sales mix of overseas business will drive an accelerated profit release ahead. This leads to our higher net income forecast for 2026 by 13% to RMB20bn.
　　We are optimistic about Geely’s potential to continuously close the gap with current EV leader in both revenue scale and profitability, driven by sustained domestic market share expansion, accelerated overseas growth, and a strengthened leadership in smart EV techs.
　　For domestic market, we notice that there remain notable gaps in Geely Galaxy’s product coverage across multiple cost-conscious sub-segments priced below RMB200k. Starting in 2H25, as the company set to accelerate rollouts of diversified Galaxy models to cater wider group of audiences in affordable segment, we expect the company to extend the rapid market share gains and even surpass the sales volume of the NEV giant domestically in coming two years.
　　For overseas market, we view the year 2026 as a pivotal beginning year of Geely’s serious push into overseas markets. Unlike BYD’s all-NEV export strategy, Geely plans to ship both ICE (mainly HEV) and NEV (mainly PHEV) models at the same time. This dual-track approach should meaningfully expand its addressable market. Building on this year’s 400k-420k units export assumption, we forecast overseas volume likely to jump around 50% YoY to 600k units next year.
　　At present, Geely’s shares are trading at 12x 2025E P/E and 9x 2026E P/E, a significant discount relative to NEV giant BYD. We deem such valuation discount has yet to reflect Geely’s current NEV leadership (No.2) and the potential to overtake BYD in visible time as it rapidly closes gaps in both sales volume and profitability with BYD.
　　In all, we believe Geely is poised to challenge BYD’s dominance as a global NEV leader. Aligning with fundamentals, we expect Geely’s valuation discount to BYD to continue closing. By adopting 15x 2026E P/E multiple, we raise our target price to HK$32.00. Reiterate BUY rating.