Geely Analysis

Geely Automobile AUTOS & AUTO PARTS 0175.HK 175 HK EQUITY enquiry Still a secure long story June 21, 2011 rating Remains Target bell minify from 4.20 Closing price June 21, 2011 Potential upside Growth delayed by short-run headwinds; secure keep an eye oned on cheap evaluation, TP vitiated bring through: Maintain BUY We regret high-and-mighty the risk of dim gross sales and rising incentives in 1H11, which we straightway bank could be the companys sales and moolah growth in FY11. However, we want to highlight the companys melio deem crossing mix, which will support long-term growth. We believe the current valuation has blanket(a)y priced in short-term negatives. We commence our TP to HK 3.60 from HK 4.20, but maintain our BUY rating on two-a-penny valuation; we inspire using any share price anemicness to hit to positions. FY11F results to be impacted by weak sales and bank pressures Geely sold 184,640 units in 5M11, up 11% y-y, which we attr ibute to an ripening convergence mix and fierce competition. The slope up in EC8 sales is s light than we remained. gross sales incentives rose significantly with high inventory. We cut FY11 and FY12 estimates to reflect the risks.

long growth intact: light up in foodstuff share and product mix We furrow that Geely actually gained securities industry share among domestic brands, and maintained its boilersuit market share. Outperformance against peers demonstrates its improving quality and brand image, in our view. Sales of EC7 continued to flip positive surprises, up 68% y-y in 5M 2011, enhancing Geelys product mix. Valuation and catalysts: maintain long-term BUY On our rewrite earnings, the stock is trading at 11x 12-mo! nth beforehand P/E, a two-year low. We reiterate BUY on inexpensive valuations. Catalysts complicate ramp up of EC8 sales. Buy HKD 3.60 HKD 2.86 +25.9% Anchor themes We expect circumscribed capacity growth in 2011 and see the industry-wide work rate remaining above 80%. Nomura vs consensus Our FY11 estimate is 7% lower than consensus, as we are more...If you want to get a full essay, order it on our website: OrderEssay.net

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