On August 21, during the "window period" when listed companies successively release their semi-annual reports, Geely Auto (00175.HK) presented the market with a midterm performance report that exceeded expectations.

Revenue reached 107.3 billion yuan, a year-on-year increase of 47%, reaching a historical high. Profitability saw a sharp increase, with gross profit rising to 16.2 billion yuan and a gross margin of 15.1%. Non-GAAP net income attributable to shareholders reached 3.37 billion yuan, a year-on-year increase of 114%. Net cash level increased by 25.4% to 35.7 billion yuan.

In the first half of the year, the automotive industry performed well in production and sales due to the low base, but companies still face pressure on profitability due to intensified competition. Geely Auto did not get caught up in a simple "price war", not only surpassing the milestone of 100 billion yuan in revenue, but also continuing to climb in terms of profitability.

From a certain perspective, Geely Auto, which is already at the forefront of the industry, is entering a "snowball" moment.

Record high revenue and sales volumes, leading the industry in value competition.

Specifically in terms of operations, Geely's new energy main line logic is becoming increasingly clear, and its development is seeing comprehensive improvement.

In the first half of the year, Geely's total cumulative sales reached 0.956 million units, an increase of approximately 41% compared to the previous year, with sales of new energy products exceeding 0.32 million units, a year-on-year increase of approximately 117%. The penetration rate of new energy vehicles increased from 21.8% in the same period last year to 33.5%.

In comparison, the passenger vehicle market grew by 6% in the first half of the year, with new energy vehicles growing by 32%. This shows that both overall sales and new energy vehicles, Geely's growth rate far exceeds the industry average.

This is mainly due to the three main brands that have driven the growth of Geely Auto's sales: Geely, Lynk & Co, and Zeekr.

As for Zeekr, it delivered a total of 87,870 vehicles in the first half of the year, a year-on-year increase of 106%, and its growth momentum remains strong. As of the end of July, Zeekr has delivered over 0.3 million vehicles in 33 months, setting a new record for the fastest delivery among pure electric new forces.

The performance of Geely Silver Galaxy is also impressive, with a cumulative sales of 0.081 million vehicles in the first half of the year, a year-on-year increase of about 742%. Since its release, its growth rate has subverted the industry's perception of new brands, with monthly sales exceeding 10,000, a goal that other new energy vehicle companies took two or three years to achieve. This is enough to demonstrate Geely Silver Galaxy's strong product power in the mainstream price range market.

In addition, Lynk & Co has been achieving results in the high-end car field by entering the new energy layout in a combination of "hybrid + pure electric". In the first half of the year, Lynk & Co's total sales reached 0.126 million vehicles, with cumulative sales of Lynk & Co new energy vehicles reaching 0.064 million vehicles, accounting for a record high of 50.9%.

It can be seen that Geely will continue to accelerate its comprehensive transformation to new energy in 2024, and the layout of new energy transformation is driving the comprehensive growth of multiple brands.

As for this year, the launch of models such as Zeekr 7X, Zeekr MIX, Lynk & Co 07, and Silver Galaxy L5\E5 means that the product matrix is further expanded, the user base is expanded, and Geely is entering a new cycle of strong products. At present, Geely has the ability to continuously create popular models such as Zeekr 001 and Silver Galaxy L7, and we can expect that after the arrival of the strong product cycle, the penetration rate of new energy vehicles and the proportion of high-end models among multiple brands will continue to increase, and sales and market share will continue to rise.

Looking at the performance level, with the continuous optimization of scale effects and product structure, Geely Auto's gross profit margin will most likely further improve, expanding its profit space.

Technological innovation enhances the intrinsic value of companies, and Geely continues to lead in the second half.

The essence of the transformation of the new energy vehicle market is a technological revolution, with electrification in the first half and intelligence in the second half. In this process, players who only engage in simple assembly will be eliminated, and automakers with core technologies will survive.

So, in the long run, in the next competitive stage, whether technology is no longer a factor of competition between automakers, but different technological routes, underlying architectures, and ecological systems will determine the final ranking in the industry.

In recent years, we have seen Geely's continuous milestone technology innovation in intelligent technology, from the CMA and SEA platform architectures, to the first self-developed rule-grade 7nm intelligent cockpit chip 'Dragon Eagle 1', Geely Xingrui AI large models, and then to the Shield Dagger battery, GEA global intelligent new energy architecture, and Galaxy 11-in-1 intelligent electric drive. Geely constantly delivers intelligence and technology innovation, empowering products with high value-added, and leading the new energy vehicle track.

Based on the 'Intelligence Geely 2025' strategic plan, Geely is continuously making technological innovations in intelligence, eliminating market pains, and providing consumers with the best possible driving experience.

In terms of intelligent driving, Jike 001 and Jike 009 high-speed NZP autonomous navigation assistance have been opened in 169 cities, covering more than 95% of Jike car owners' cities as of June 30. At the same time, Geely cooperates with self-developed solutions. The vast intelligent driving has obtained L3 autonomous driving test licenses in Shanghai and Hangzhou. The Jike 007 high-speed NZP equipped with the vast intelligent driving is available nationwide, and it is the industry's first mass-produced mechanical parking assistance with automatic parking.

An Conghui, President of Geely Holding Group and CEO of Jike Intelligent Technology, previewed the new product rhythm of Jike. In the second half of this year, Jike will launch two new models. Among them, Jike 7X will make its global debut at the Chengdu Auto Show at the end of August and is expected to be officially released in September. Jike MIX will be officially launched and released in the fourth quarter. Both models will be equipped with the self-developed vast intelligent driving 2.0.

In February of this year, the 'Integration of Heaven and Earth' large-scale travel ecosystem was further improved to empower Geely models with autonomous driving and intelligent connected services. The Galaxy E8 will be the first to be equipped with this satellite communication technology.

In terms of intelligent cabins, the 'Galaxy Flyme Auto' intelligent cabin system further provides a differentiated experience for Geely models, bringing faster vehicle-machine response speed and a clearer sensory experience. From the perspective of industry trends, the landing of the entire self-developed cabin solution is a complex engineering system, testing the combination of software and hardware, and also requires powerful computing platforms and cutting-edge intelligent large models, which happens to be Geely's accumulation and advantage.

For example, the Jikeng 009 Glory, the world's only mass-produced debut with the 'Dual 8295 Chip' computing platform, providing independent computing support for the front and rear cabins; the Jikeng MIX intelligent cabin creates more than 20 scene modes, becoming the electric vehicle with the most cabin scene modes in the industry.

An Conghui, President of Geely Holding Group and CEO of Jikeng Intelligent Technology, stated at the latest performance exchange meeting that the new Jikeng 009, as well as the 2025 models Jikeng 001 and Jikeng 007, have no plans for annual model iterations within the next year from the date of product launch, but will continue to carry out OTA software upgrades and optional configuration updates to ensure that the vehicles maintain an advantage in key areas such as safety, power battery system, and control. They will also continue to iterate on intelligent driving and intelligent cabin technology to provide a better user experience.

In my opinion, for Geely, with the deepening of intelligence transformation, vehicle delivery may just be the starting point. Geely is continuously bringing more consumer value through continuous technological innovation. In the future, Geely will harvest positive feedback from the market and consumers through the continuous realization of technology, further expanding sales and unleashing strong power after the transformation to new energy.

It is worth noting that in the first half of this year, the revenue from power battery system, technical authorization, and R&D service income in other business increased to 19.825 billion yuan, significantly diversifying the business structure and making a significant contribution to the substantial revenue growth. Haitong Securities further mentioned in a research report that Geely's automobile brand architecture is reasonable and clear. With the gradual implementation of the 'Smart Geely 2025' global strategy, the company's overall revenue and net profit attributable to the parent are expected to continue growing.

Epilogue:

In the aspect of overseas expansion of new energy vehicles, Geely is also relying on technological innovation to create high-value products and accelerate the development of overseas markets.

Jikeng has entered more than 30 countries including Sweden, the Netherlands, the United Arab Emirates, Saudi Arabia, and Mexico. Jikeng 001 and Jikeng X have already started overseas deliveries. As of June 30, Geely has added more than 120 new sales and service outlets overseas, with a global presence in 76 countries and over 650 overseas sales and service outlets. The current overseas export target for Geely vehicles has been raised from 0.33 million vehicles at the beginning of the year to 0.38 million vehicles.

Geely's brand and models are being recognized in the global market, providing strong support for overall sales growth.

Looking further into the performance of the second half of the year and the whole year, Geely's total sales in the first half of the year exceeded 0.95 million vehicles, reaching 50% of the original target of 1.9 million vehicles. Geely has raised its annual target to 2 million vehicles, but based on market trends, the sales performance of the second half of the year tends to be significantly better than that of the first half. It is highly probable that Geely will still be able to achieve or even exceed the annual sales target.

Returning to the performance level, against the backdrop of price competition and the profit pressure faced by domestic new energy vehicles, Geely has always insisted on multiple brands with 'blood-making' capabilities, rather than sacrificing profits to win the so-called price war. Geely adheres to a value war, and behind this is long-termism, focusing on stable and sustainable performance growth.

In the eyes of many institutions, as the comprehensive layout of new energy is completed, Geely will continue to strengthen its industrial advantages and internal synergy integration, and it is expected that the future profitability will continue to improve.