Key Takeaways:
- Morgan Stanley forecasts Geely Auto 2Q net profit at RMB4.8B to RMB5B
- Quarterly revenue expected at about RMB87 billion, with 3% sequential ASP expansion
- Overseas sales seen surging 120% to 130% YoY in the second half of 2026
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Morgan Stanley sees Geely Auto 2Q profit at RMB4.8-5B, keeps Overweight
Morgan Stanley forecast Geely Auto's second-quarter net profit at RMB4.8 billion to RMB5 billion, reiterating its Overweight rating on the stock.
The broker expects the automaker's earnings upcycle to reverse the industry's downcycle, with earnings growth momentum continuing into the second half as new models launch and overseas markets more than double, Morgan Stanley said in a research report.
The quarterly revenue is expected to reach about RMB87 billion, implying a 3% sequential expansion in average selling price. Overseas sales in the second half are forecast to spike 120% to 130% year over year, lifting the overseas contribution to 30% to 35% of total sales. Potential European Union tariffs on China-made plug-in hybrids would affect only about 2% of the group's total sales volume, which remains manageable, the broker said.
The forecast comes as Geely's shares fell 4.7% on the day, with short selling accounting for 36.2% of turnover — a level that suggests bearish positioning that could unwind if earnings beat expectations. Morgan Stanley maintained its HKD28 price target on the stock.
Geely's premiumization strategy, driven by its Lynk & Co and Zeekr brands, has helped offset subdued domestic sales caused by channel inventory digestion, the broker said. The company's overseas expansion is accelerating, with sales growth in Europe, the Middle East and Southeast Asia outpacing the domestic market. Sales growth will accelerate in the second half following recent new vehicle launches and an intensive product pipeline, Morgan Stanley said.
The Morgan Stanley call contrasts with JPMorgan's recent downgrade of peer GAC Group to Underweight. JPMorgan named Geely Auto among its top picks for the second half of 2026, alongside NIO and BYD Co. The positive analyst sentiment comes even as Volvo Cars, majority-owned by Geely Holding, posted a smaller second-quarter operating profit that missed estimates, though the company expressed confidence in improved second-half performance.
The Morgan Stanley call positions Geely as a beneficiary of premiumization and overseas expansion, with earnings growth expected to accelerate in the second half. Investors will watch the company's actual 2Q results and the impact of new model launches on margins.
This article is for informational purposes only and does not constitute investment advice.
