[ET Net News Agency, 5 June 2020] Nomura lowered its target price for Geely Automobile
Holdings (00175) to HK$13.74 from HK$14.6 and maintained its "buy" rating.
The research house cited Geely management at the Nomura Investment Forum Asia on 1 June
saying that (1) the company regained positive shipment growth in April; (2) GPM could be
lower but still outperform most of its peers; (3) ASP should benefit from improving
product mix; (4) the new model pipeline is strong with six launches planned for the year;
and (5) the new share placement on 29 May helps build a war chest to meet unexpected
external uncertainties.
Nomura noted the complexity of the proposed merger, spanning multiple geographies, means
that it should take some time to receive all necessary approvals. Hence, a stronger war
chest should help lower the funding risk for the merger in case of unfavorable financial
markets between now and at the time of the merger completion.
Nomura lowered its FY2020 EPS estimate by 9% to reflect the 6% dilution from the share
placement and 50ppt lower GPM owing to a weak 1Q. (KL)