Goldman Sachs lowered its target price for Geely Automobile (00175) to HK$10 from HK$11.65 and maintained its "neutral" rating.
The research house said Geely reported below expectation 1H results. Management executed strongly against the given opportunity set, but it was a challenging backdrop with -9% industry retail volume and competitors' intensive product launches.
The reiterated volume guidance implies flat 2H sales volume, reassuring the sequential improvement of 2H operating condition. New businesses, including Genius AFC, component sales, and intellectual property licensing are ramping.
Goldman expects the segments to cushion core business' profit weakness in the foreseeable years. It cut 2019/20 EPS forecasts by 22%/12% on worse sales volume/capacity utilization.