In 3Q25, Geely’s total revenue grew by 27% YoY, beating estimates on favourable product mix shift toward higher-priced NEV models.Adjusting for one-off items, 3Q25 core net profit advanced to RMB3.96bn (vs. RMB3.2bn in 2Q25), broadly in line. Amid the industry-wide headwinds for OEM ahead, we anticipate Geely is well poised to encounter such challenges through: i) product offensive with a full-spectrum and competitive lineups in the RMB100k-200k affordable segment to scale up and address untapped niches, paired with continued premium advancements. ii) accelerated go-global progress which may add 200-250k units to total volume for 2026 driven by faster product introductions and widened distribution network abroad. Now its valuation stands attractive at 8.2x 2026E P/E, which we deem undervalued given Geely’s strategic agility amid industry headwinds,and growth potential as an industry leader supported by competitive new model cycle both domestically and abroad. Reiterate BUY with unchanged TP of HK$32.00, equivalent to 15x 2026E P/E.
　　Key Factors for Rating
　　Top-line beat on favourable product structure shift, while core net profit largely in line. In 3Q25, total revenue rose by 27% YoY to RMB89.2bn,ahead of our expectations on a continued favourable mix shift toward higher-priced NEV models such as Galaxy M9, ZEEKR 9X and Lynk & Co 10 EMP, which drove revenue per vehicle up to RMB117k from RMB110k/103k in 2Q25/1Q25.3Q25 gross margin edged up 1.2ppts YoY to 16.6%, despite pulling back from17.1% on seasonality. After adjusting for one-offs (mostly FX loss of RMB250min 3Q vs. RMB600m+ FX gains in 2Q25), 3Q25 core net profits advanced from RMB3.2bn to RMB3.96bn, broadly in line with our forecasts.
　　Navigating 2026 industry-wide headwinds through product offensive and go-global acceleration. Heading into 2026, the industry-wide headwinds loom large from NEV purchase tax scale-back (5% additional cost subjected to car price) and lithium battery capacity shortages that would likely trigger another cost hikes. In our view, Geely should poise well to encounter such challenges through: i) product offensive with a full-spectrum and competitive lineups in the RMB100k-200k affordable segment to scale up and address untapped niches,paired with continued premium advancements. ii) accelerated go-global progress. However, YTD exports appear flat, mainly dragged by over 50% Russian market demand drop which conceals YTD explosive growth of non-Russian markets including Europe, southeast Asia, and Latin America. For 2026,we expect faster product introductions and widened distribution network abroadcould add at least 200-250k units to export volume.
　　Valuation
　　To reflect the faster product structure improvements seen in 3Q25, we modestly raise our 2025-26 revenue forecasts by 1.4%/2.7% to RMB338bn and RMB415.3bn, respectively, based on the sales volume forecasts of 3.01m unitsand 3.6m units. We leave our 2025-26 net profit forecasts intact at RMB15bn and RMB20.1bn, respectively.
　　Now its P/E valuation stands attractive at 11.0x 2025E P/E and 8.2x 2026E P/E,which we deem undervalued given Geely’s strategic agility amid industry headwinds, and stronger growth potential supported by competitive new model cycle domestically and abroad. Reiterate BUY with unchanged TP of HK$32.00,equivalent to 15x 2025E/2026E P/E.