Geely Automobile Holdings - 1H26 results briefing takeaways
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- 1H26 core net profit rose 46% y/y to RMB9.7bn, with gross margin expanding 1.5ppt to 17.9% on stronger Zeekr and export mix
- Management raised FY26 export guidance to 920k units, but we see upside to c.1.1mn given 7M26 exports have already reached c.580k
- Management reshuffle should have limited operational impact, with Li Shufu remaining Chairman of parent Geely Holding as the group further professionalises management structure
- Maintain BUY; raise TP to HKD29 (pegged to 11x rolling PE) on stronger export assumptions, current 8x rolling PE is attractive
Solid 1H26 results reinforce Geely’s strategic progress. Geely reported an in-line set of 1H26 results, with core net profit rising 46% y/y to RMB9.7bn. Revenue grew 15% y/y, while gross margin expanded a healthy 1.5ppt y/y to 17.9%, which we view positively given ongoing raw material cost inflation. We attribute the improvement largely to a more favourable sales mix, supported by strong growth in premium brand Zeekr (+97% y/y in 1H26) and exports (+158% y/y). With raw material prices largely locked in for 2H26, we believe Geely should be able to contain most cost pressures and sustain sequential margin improvement.
Exports target lifted but still too prudent. Management raised its full-year exports guidance to 920k during the results briefing (from 640k in early 2026). However, with 7M26 exports already reaching c.580k units and monthly exports exceeding 100k units in each of the past two months, we believe the revised target remains overly too conservative. Export momentum should also continue to strengthen as Geely expands its overseas product offering across a broader range of price points, while Zeekr accelerates the rollout of higher-end models including the 9X and 8X. Based on the current trajectory, we project Geely to reach c.1.1mn export units in 2026, c.20% above management’s revised target.
Managerial changes but limited impact in our view. Geely announced a major management reshuffle, with Li Shufu stepping down as Chairman of Geely Auto (175 HK) and An Conghui taking over the role, alongside a transition in the CEO position. However, we do not view the change as a meaningful shift in strategic direction, with Li Shufu remains as the Chairman of Geely Holding (the parent company of 175 HK), and will also serve as Lifetime Honorary Chairman of Geely Auto. We believe this reflects more a reduction in Li Shufu’s involvement in day-to-day operations and a further institutionalisation of the group’s management structure. In our view, the reshuffle represents another step in Geely’s transition from a founder-led organisation to a more professionally managed global automotive company, with limited near-term impact to Geely’s operations.
BUY with new TP HKD29 (vs prev HKD28). We raised our FY26F earnings by 3% to factor in the stronger exports sales. We raise TP to HKD29, based on 11x 12-month rolling PE, pegged to 5-year historical average. Currently valuation of 8x rolling PE is attractive. Maintain BUY on Geely given its solid earnings outlook.
1H26 results briefing takeaway
Overseas Expansion & Export Target Outlook. Company raised its 2026 export target to 920k units (from 640k earlier this year) and reiterated its longer-term ambition for two-thirds of sales to come from overseas markets. Rather than pursuing large-scale greenfield investments, company plans to leverage existing capacity within Geely Holding and external partners, sharing manufacturing, supply chains, channels and service networks. Zeekr will also accelerate overseas expansion, with the 9X launching in Q3 and the 8X from Q4, supporting Geely’s push into premium and luxury segments.
Governance Transition & Organisational Setup. Geely announced a significant management reshuffle aimed at strengthening professional and institutionalised governance. Li Shufu will step down as Chairman of Geely Auto while remaining Chairman of parent Geely Holding and becoming Lifetime Honorary Chairman of Geely Auto. An Conghui will assume the Chairmanship, alongside a CEO transition to the next generation of management. Under the “One Geely” strategy, Geely Holding may also inject strategically valuable businesses into Geely Auto over time, with batteries, electric drives and automotive electronics highlighted as key capabilities, although no timetable was provided.
“One Geely” Brand & Product Portfolio Roadmap. Geely has already reduced its product portfolio by more than 20% to minimise overlap and sharpen brand positioning. Galaxy will focus on high-value mainstream products, Lynk & Co on sporty and differentiated offerings, and Zeekr on technology-driven premium and luxury vehicles. Management also acknowledged a gap in competitive mid-tier products between Zeekr and Geely’s higher-volume entry models, which it sees as a key area for improvement. Several new models across Lynk & Co, Galaxy and Zeekr are scheduled for 2H26.
Technology Pipeline & Long-Term Strategic Timeline. Geely will continue prioritising its “full-domain AI” strategy across intelligent driving, smart cockpits, electrification and energy management. Key initiatives include further upgrades to Qianli Haohan, deeper cockpit-driving integration and fifth-generation ultra-fast charging with AI-based thermal management and battery monitoring. Geely will also stop developing conventional ICE-only vehicles and progressively migrate China Star toward I-HAVE hybrid technology, with overseas rollout beginning next year. A more detailed 2030 strategy briefing is planned around year-end.
Q&A
Q1: What kind of overseas customer feedback have the Zeekr 9X and 8X received, and what are the expected sales volumes domestically and internationally?
A1: Overseas interest is strong, particularly in the Middle East and Europe, with some customers importing cars before formal launches. The 9X will launch overseas from 3Q26 and the 8X from 4Q26. Expects Zeekr exports to exceed 80k units in 2026 (vs 42k in 1H26).
Q2: What is the product and technical roadmap for China Star, and will Geely migrate onto the I-HEV hybrid platform?
A2: We will stop developing conventional ICE-only vehicles, with China Star progressively shifting to I-HEV. Several I-HEV models will launch domestically in 2H26, followed by broader overseas rollout from 2027. We expect better fuel economy and performance versus traditional hybrids.
Q3: What are the key strengths and challenges of Geely's global shared-capacity model?
A3: Three key advantages are higher quality, faster localisation and lower investment risk. We will utilise capacity within Geely Holding and external partners while sharing supply chains, channels and service networks. The key execution challenge is coordinating multiple brands and partners effectively.
Q4: Given rising raw-material costs, what is Geely's gross-margin outlook, and what is the BEV launch cadence?
A4: We have mitigated cost pressure through advance inventory and supplier price lock-ins. With a stronger export and premium mix, we expect 3Q26 gross margin to be no worse than 2Q26. Several new BEVs across Galaxy, Lynk & Co and Zeekr will launch in 2H26.
Q5: Will Ford use Geely-developed platforms at its Spanish plant, and what is the trade-payables outlook?
A5: The Ford cooperation will use Geely's GEA base architecture, with European production serving Europe only. Trade payables rose modestly to RMB84bn from RMB81bn, while payable turnover improved to 103 days in 1H26 and 96 days in 2Q26, with further improvement expected.
Q6: What are Geely's plans for charging-network build-out and charging technology?
A6: Management focused mainly on charging technology rather than network or partnership targets. Geely is moving toward MW-level charging, with its fifth-generation system using AI thermal management and battery monitoring to improve charging speed while protecting battery safety and longevity. More details are due next month.
Q7: Will Geely streamline its product portfolio under the “One Geely” strategy?
A7: Yes. Geely has already cut its product portfolio by more than 20% to reduce overlap and sharpen brand positioning. Management also acknowledged a gap in stronger mid-tier blockbuster models and will prioritise filling this segment going forward.
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