GuruFocus -
- Total Sales Growth: 41% year-on-year, reaching 956,000 vehicles.
- Revenue: RMB107.3 billion, a YoY increase of 46.6%.
- Shareholders' Profit: Increased by 574.7% YoY to RMB10.6 billion.
- Profit Excluding Extraordinary Items: Increased by 114.4% to RMB3.37 billion.
- New Energy Vehicle Sales: Grew by 116% YoY to 320,000 units.
- Export Volume: Increased to 197,000 units, with export ratio rising from 17.4% to 20.7%.
- Revenue Per Vehicle: Increased by 4.2% YoY to RMB105,000.
- Gross Profit: Increased by 53.9% YoY to RMB16.2 billion.
- Gross Profit Margin: Increased by 0.7 percentage points to 15.1%.
- Sales Expense Ratio: Decreased by 0.6 percentage points.
- Admin Expense Ratio: Decreased by 0.3 percentage points.
- R&D Investment: Increased by 17.9% to RMB6.97 billion.
- Total Cash: Reached a historical high of RMB41.488 billion.
- Zeekr Sales: Increased by 106% YoY to 88,000 vehicles.
- Lynk & Co Sales: Increased by 54% YoY to 126,000 vehicles.
- Genius Auto Finance Net Profit: Increased by 3.2% to RMB670 million.
- Active Contracts: Reached 1.45 million, a 9.1% YoY increase.
- Full-Year Sales Target (NYSE:TGT): Raised from 1.9 million to 2 million vehicles.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Geely Automobile Holdings Ltd (GELYF) reported a significant year-on-year sales growth of 41%, reaching 956,000 vehicles in the first half of the year.
- The company's revenue surpassed RMB100 billion for the first time, reaching RMB107.3 billion, marking a 46.6% increase year-on-year.
- Shareholders' profit saw a substantial increase of 574.7% year-on-year to RMB10.6 billion.
- Geely's new energy vehicle sales grew by 116% year-on-year to 320,000 units, outperforming the market.
- The company has a strong cash reserve, reaching a historical high of RMB41.488 billion in the first half of the year.
- Despite the growth, Geely's results are not yet comparable to major competitors, indicating room for improvement.
- The company faces challenges in maintaining profitability amidst fierce market competition and price wars.
- There are concerns about the impact of potential European Union tariffs on Geely's electric vehicle exports.
- Geely's international expansion strategy may face hurdles due to geopolitical and regulatory challenges.
- The rapid iteration of Zeekr models led to customer dissatisfaction, highlighting potential issues in communication and product launch strategies.
A: Jia Yue Gan, CEO of Geely Auto Group, explained that Geely plans to expand its international business by increasing exports and exploring new markets, particularly in emerging regions like Kazakhstan and Mexico. Geely will also focus on Southeast Asia, the Middle East, New Zealand, and Australia. The strategy involves working with local partners and distributors, opening new plants in countries like Ghana and Egypt, and leveraging successful models like Proton in Asia. Geely aims to enhance its brand presence and competitiveness through these efforts.
Q: How does Geely plan to utilize its high cash reserves, and what is the company's approach to dividends?
A: Dai Yong, Deputy CFO, stated that Geely has a strong cash reserve of RMB 44.4 billion. The company is committed to maintaining a dividend payout ratio of around 30% or higher. Geely plans to allocate cash towards capital expenditures, focusing on improving production capacity and investing in R&D to enhance technological capabilities. This strategy aims to optimize cash flow and support future growth.
Q: Can you provide an update on the collaboration between Geely and Renault (EPA:RENA), particularly regarding the HORSE powertrain joint venture?
A: Dong Hui Li, CEO of Geely Holding Group, highlighted that the collaboration with Renault aims to become a leader in powertrain technology. The HORSE joint venture will have an annual capacity of 50,000 powertrain systems, benefiting brands like Proton, Nissan, and Mitsubishi. The involvement of Saudi Aramco (TADAWUL:2222) as a strategic shareholder, with a 10% stake, will support supply chain expansion and decarbonization efforts. The joint venture is progressing well, with management teams and strategies in place.
Q: How does Geely view the impact of the European Union's potential tariff adjustments on electric vehicles, and what is the company's response?
A: Cong Hui An, CEO of Zeekr Intelligent Technology, acknowledged that increased tariffs could impact sales in Europe. Geely plans to focus on enhancing product competitiveness, quality, and service. The company is exploring local production possibilities in Europe but has no specific plans to announce yet. Geely aims to maintain its market presence by leveraging partnerships and existing production facilities.
Q: What is Geely's outlook on the ongoing price war in the automotive market, and how does it plan to maintain growth?
A: Sheng Yue Gui, CEO of Geely Automobile Holdings, emphasized that Geely will not rely on price wars for growth. Instead, the company focuses on technology innovation, high-quality products, and customer satisfaction. Geely aims to maintain profitability and competitiveness by investing in new energy vehicles and intelligent technologies. The company is confident in its ability to navigate market challenges and achieve sustainable growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.