Lyon: GEELY AUTO (00175) "outperformed the market" rating with a target price of HK$23.

Lyon released a research report stating that GEELY AUTO (00175) announced a profit increase, with an expected net profit in the first quarter ranging from 5.2 billion to 5.8 billion RMB, a year-on-year increase of 2.2 to 2.7 times, exceeding market expectations but in line with the bank's expectations. Excluding foreign exchange gains of 2 to 2.3 billion RMB, the bank expects Geely's adjusted net profit per vehicle in the first quarter to reach 4500 to 5000 RMB, compared to 3300 RMB in the same quarter last year. The bank has set a target price of 23 Hong Kong dollars for Geely, with an "outperform" rating. The bank believes that Geely's strong profit growth is mainly driven by the rapid growth in electric vehicle sales, economies of scale, and cost reductions from technological upgrades. The bank points out that Geely's current sales guidance of 2.71 million vehicles for this year is relatively conservative, and believes that the company is likely to continue to achieve strong profit performance as it has already sold 704,000 vehicles in the first quarter, accounting for 26% of the annual guidance. The bank also sees promising prospects for the company's future vehicle models, which can bring about economies of scale.