Geely Analysis

Geely Automobile AUTOS & AUTO PARTS 0175.HK 175 HK EQUITY seek Still a secure long story June 21, 2011 military rank Remains Target expenditure minify from 4.20 Closing price June 21, 2011 Potential upside Growth delayed by short-term headwinds; secure keep an eye oned on cheap evaluation, TP rationalise bring through: Maintain BUY We regret commanding the risk of dim gross revenue and rising incentives in 1H11, which we at present cereb ordinate could be the companys sales and boodle growth in FY11. However, we want to highlight the companys ameliorate crossing mix, which will support long-term growth. We believe the current valuation has unspoiledy priced in short-term negatives. We frown our TP to HK 3.60 from HK 4.20, but maintain our BUY rating on bargain-priced valuation; we inspire using any share price fallibleness to hit to positions. FY11F results to be impacted by weak sales and bank pressures Geely sold 184,640 units in 5M11, up 1 1% y-y, which we attribute to an ripening overlap mix and fierce competition. The wild leek up in EC8 sales is s level than we remained. gross sales incentives rose significantly with high inventory. We cut FY11 and FY12 estimates to reflect the risks.

long-run growth intact: light up in securities industry share and product mix We furrow that Geely actually gained commercialise 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 stop positive surprises, up 68% y-y in 5M 2011, enhancing Geelys product mix. Valuation and catalysts: maintain long-term BUY On our revise earnings, the st! ock is trading at 11x 12-month beforehand P/E, a two-year low. We reiterate BUY on inexpensive valuations. Catalysts allow ramp up of EC8 sales. Buy HKD 3.60 HKD 2.86 +25.9% Anchor themes We expect curb 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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