[ET Net News Agency, 9 May 2019] Citi Research lowered its target price for Geely
Automobile (00175) to HK$16.4 from HK$21.1 and downgraded its rating to "neutral" from
"buy".
The research house said the downgrade factored in (1) mass market ICE vehicle weakness
lingering into 2H, (2) only a mild auto stimulus to be launched by China government in
2019, (3) de-stocking pressure in 2Q and NS6 emission upgrade from July 2019 entailing
higher costs.
Citi adjusted its 2019-20 net profit forecasts for Geely to Rmb10.7/13.9/15.4bn with 20%
CAGR. It expects Geely's 2019 ROE to decline 10ppt YoY to 20.8% followed by a recovery to
23.1% in 2020 with PV sales mix changes, and new incremental growth from its auto-part
business. (KL)