Credit Suisse said the management of Geely Automobile (00175) guided for an improved margin in 2017, thanks to new products' reduced marketing expenses; rising capacity utilisation rate at new plants, i.e., Chunxiao, Baoji, Jinzhong, Linhai, reduced component sourcing cost since 2017 which did not happen in 2016 when auto demand was very strong.
For Lynk & Co brand operation, management expects 15K / 150K unit sales in 2017 / 2018. Lynk & Co brand's dealer number will increase from 100 at end-2017 to 300-400 in the medium term. The brand's gross margin should increase over time, from a relatively low level in the beginning to 24% in four to five years.
The research house maintained its target price of HK$11.4 and a rating of "neutral" for Geely Auto.
22/05/2017 11:26
[I-bank focus]Geely Auto sees improved margin in 2017 - CS
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