Rerating Is a Catalyst to Share Price, Maintain "Accumulate" 重新评级为股价催化剂，维持“收集”

股

票

研 [Table_Title] Company Report: Geely Automobile (00175 HK) Toliver Ma 马守彰

究 (852) 2509 5317 EquityResearch 公司报告：吉利汽车 (00175 HK) [email protected]

9 July 2020 [Table_Summary] Rerating Is a Catalyst to Share Price, Maintain "Accumulate" 重新评级为股价催化剂，维持“收集”

 Geely Auto’s sales in June continued to show strong momentum. Sales [Table_Rank] 公 was up 21.2% yoy to 110,129 units. Sales in June rode the recovering trend Rating: Accumulate of the auto market, partly due to 1) pent-up demand, 2) supportive Maintained 司 government policies, and 3) low base comparison. SUV sales was very 报 strong in 2Q20, and the Company’s competitive SUV products have been 评级：收集 (维持) very supportive, particularly the Boyue, Emgrand GS, Vision X6 and Binyue. 告 Meanwhile, benefiting from the Lynk 05 and Lynk 03, Lynk & Co. showed [Table_Price] strong performance, up 52.7% yoy. 6-18m TP 目标价: HK$20.00 CompanyReport Revised from 原目标价: HK$14.60  Sales to maintain growth at a relatively good pace. Most new models were launched in 1H20, with only the CMA-based sedan, Preface (code Share price 股价: HK$17.000 FS11), to be expected to launch in 3Q20. In June, the Haoyue and Lynk 05 had already started selling and we believe that the ramp-up period will be stronger in 2H20. Stock performance  Market rerating continues. Rerating was mainly pushed by two factors. 1) 股价表现

Positive sentiment on the recovering industry. Decent growth was generally 50.0 % of return maintained in 2Q20, particularly as the Company outperformed the market. 2) 40.0 The proposal of the listing on the Sci-Tech Board. The Company's stock price 30.0 reacted positively to the announcement.

证 20.0  The Company’s has been generating a 1-month relative return of 32.5%. The 券告 10.0 Company is also trading at a very high valuation of 12-month forward PER of 16.5x. Nonetheless, based on the current market sentiment and the 0.0 研报

Company’s positive outlook, we believe that it can sustain the current (10.0)

究究 valuation. We have increased our TP to HK$20.00 due to the rerating of (20.0) the Company, and maintained investment rating as "Accumulate". Our 报 (30.0)

研 TP represents 16.5x 2021 PER and 14.3x 2022 PER. Jul-19 Oct-19 Jan-20 Apr-20 Jul-20

告  吉利汽车 6 月份的销售继续显示强劲势头。销量同比增长 21.2%至 110,129 辆。6 月份的 HSI Index GEELY AUTOMOBILE 券

EquityResearch Report 销售与汽车市场的复苏趋势一致，部分原因是：1）需求被抑制；2）政府支持政策和 3）

证低基数。SUV 销售在 2020 年第 2 季度非常强劲，公司具有竞争力的 SUV 产品给予了极大的支持，特别是博越、帝豪，远景和缤越。同时，受益于领克和领克， [Table_PriceChange] [Tab GS X6 05 03 Change in Share Price 1 M 3 M 1 Y

领克品牌表现强劲，同比增长 52.7%。股价变动 1 个月 3 个月 1 年 le_I Abs. % 36.9 47.8 45.3 汽  销售增长将保持相对良好态势。大多数新车型已经在 2020 年上半年推出，只有基于 CMA 绝对变动 % 车nfo1 的轿车 Preface（代码 FS11）预计在 2020 年第 3 季度推出。在 6 月，豪越和领克 05 已 Rel. % to HS Index 相对恒指变动 32.2 39.9 52.0 经开始销售，我们相信 2020 年下半年会爬坡更快。 % 及 Avg. Share price(HK$) ] 13.2 12.3 12.9 平均股价（港元）  市场重估持续。重估主要受两个因素推动：1）对行业复苏的积极情绪。2020 年第 2 季度零 Source: Bloomberg, Guotai Junan International. 行业销售的增长较好，特别是公司的表现好于市场。）在科创板上市的计划。自宣布以部 2 来，公司股价反应积极。件公司的个月相对回报率为。公司的个月预测市盈率为倍，估值非常高。行  1 32.5% 12 16.5 尽管如此，基于当前的市场情绪和公司的乐观前景，我们认为它可以维持目前的估值。由业于公司重新评级，我们将目标价上调至 20.00 港元，维持投资评级为“收集”。我们的

目标价相当于 16.5 倍 2021 年市盈率和 14.3 倍 2022 年市盈率。 Automobiles & Components Sector AutomobilesComponents &

Y[Table_ear End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE [Tab 年结Profit ] 收入股东净利每股净利每股净利变动市盈率每股净资产市净率每股股息股息率净资产收益率 le_I 12/31 (RMB m) (RMB m) (RMB) (△ %) (x) (RMB) (x) (RMB) (%) (%) 2018A 106,595 12,553 1.398 17.5 10.7 5.004 3.0 0.350 2.3 31.6 nfo2 2019A 97,401 8,190 0.902 (35.5) 16.8 5.938 2.6 0.250 1.6 16.5 中] 2020F 93,478 8,880 0.942 4.4 16.4 7.474 2.1 0.319 2.1 14.6 2021F 115,376 11,091 1.106 17.4 14.0 8.461 1.8 0.402 2.6 15.5 吉外 2022F 122,376 12,729 1.269 14.7 12.2 9.569 1.6 0.466 3.0 15.7 利运汽 [Table_BaseData]Shares in issue (m) 总股数 (m) 9,812.7 Major shareholder 大股东 Geely Holding 42.7% 输 Market cap. (HK$ m) 市值 (HK$ m) 166,815.9 Free float (%) 自由流通比率 (%) 57.3 车

3 month average vol. 3 个月平均成交股数 (‘000) 79,873.9 FY20 Net gearing (%) FY20 净负债/股东资金 (%) Net cash 52 Weeks high/low (HK$) 52 周高/低 (HK$) 18.900 / 10.000 FY20 Est. NAV (HK$) FY20 每股估值（港元） 21.3

Source: the Company, Guotai Junan International. Geely Automobile (00175 GeelyHK) Automobile

See the last page for disclaimer Page 1 of 7

[Table_PageHeader]Geely Automobile (00175 HK)

SALES AND OUTLOOK

] 1 r a M t h g i R _ e l b a T [

Strong sales continued in June. Geely Auto’s sales momentum continued in June, recording sales of 110,129 units, up by 21.2% yoy. Sales in June rode the recovering trend of the auto market, partly due to 1) pent-up demand, 2) supportive government policies, and 3) low base comparison. While we expect growth to extend to 3Q20, it should be at a slower pace, particularly in Aug. and Sep. as the positive effect will diminish. In 1H20, Geely Auto only completed 38% and 40.0% of full-year sales volume estimate of the management’s guidance and our forecast, respectively. We expect that we could be a bit too optimistic on sales volume. However, with pent-up demand continuing, we expect seasonal sales trend could be different from 9July 2020 the historical reference. Therefore, we maintain our sales forecast intact.

SUV support sales. Thanks to strong demand for SUVs in the market, strong SUV products will help Geely Auto’s recovery. SUV sales was particularly strong this year, up by 20.1% in May 2020, with sales mix on par with sedans; the first time in its history. Geely Auto’s product strategy is also skewed towards SUVs. In 2020, only one all new sedan (FS11) will be launched, and the rest are all SUVs (See table-1 for new model pipeline). A similar pattern was also noticed in previous years. For this reason, Lynk & Co. also performed well in 1H20, only dropping 2.0% yoy, which is well above the market. Currently, Lynk & Co. has got five model offerings (the 01, 02, 03, 05, and 06), with the 05 and 06 being the latest additions this year. Only Lynk 03 is a sedan, and the rest are different variations of SUV. Sales mix of Lynk & Co is increasing, up to 10.3% in 1H20 as compared to 9.4% in 2019. We believe that Lynk & Co. has been on a rather good track of growth, especially that most of this growth comes

] 2 r a M t h g i R _ e l b a T [

from its sedan Lynk 03, a rare source of growth for many self-owned brands. Demand for its sporty version, the 03+, is highly sought after, and we believe the ability to craft sport cars adds a premium to the brand. Performance has been stronger than its close competitor, WEY, which has been very weak for over a year.

Figure-1: Geely Auto’s Sales and Growth Figure-2: Geely Auto’s Sales Mix by Vehicle Type

2018 Units 2019 Sedan MPV SUV 2020 180,000 60% 100.0% 2019 growth 160,000 2020 growth 40% 90.0%

80.0% (00175 HK) 140,000 20% 56.9% 120,000 70.0% 58.0% 61.1% 0% 60.0% 100,000 -20% 50.0% 80,000 吉利汽车 -40% 40.0% 60,000 30.0% -60% 40,000 20.0% 20,000 -80% 10.0% 0 -100% 0.0%

2018 2019 1H20

Jul

Apr Oct

Jan Jun

Geely Automobile

Mar

Feb

Nov Dec

Aug Sep May

Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.

Figure-3: Geely Auto’s Sales Mix by Brand Figure-4: YTD Sales Growth by Brand

Geely Lynk & Co Geely Lynk & Co Geometry 0.0% 100% Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 8.0% 9.4% 10.3% -5.0% 90% -10.0% 80% -15.0% 70% 60% -20.0% 50% -25.0% 92.0% 89.7% 89.5% 40% -30.0% 30% -35.0%

20% -40.0% 10% -45.0%

0% Report -50.0% 2018 2019 1H20

Source: the Company, Guotai Junan International. Source: the Company, Autohome, Guotai Junan International.

Note: We excluded Geometry due to its limited sales contribution. Company

See the last page for disclaimer Page 2 of 7 [Table_PageHeader]Geely Automobile (00175 HK)

Sales expected to maintain relatively good pace. As discussed, we believe that the Company’s SUV profile is competitive

enough to support its growth, and is expected to extend to 2H20. Moreover, most new models] 1 r havea M alreadyt h g i beenR _ launchede l b ina T [

1H20, with only the CMA-based sedan, Preface (code FS11), expected to be launched in 3Q20. In Jun., the Haoyue and Lynk 05

already went on sale, and we believe that the ramp-up period will be stronger in 2H20. Meanwhile, the Lynk 06 was unveiled in

Jun. 2020 and could start selling in Aug. 2020. Therefore, we believe that the impact of new models will be relatively strong in 2H20.

9July 2020 Table-1: Key Model Pipeline Brand name Model name / code Types of vehicles Expected launch date Model of upgrade Platform Icon SUV 1Q20 New BMA Geely Haoyue / VX11 Mid size SUV 2Q20 New NL Preface / FS11 Sedan 3Q20 New CMA Geometry Geometry C SUV 2Q20 New PMA 05 SUV Coupe 2Q20 New CMA Lynk & Co. 06 SUV 3Q20 New BMA Source: the Company, Autohome, Guotai Junan International.

Market rerating continues. With the positive sentiment and recovering industry, auto stocks outperformed in the recent month. Geely Auto has particularly been strong since announcing its plan to list on the Science and Technology Innovation Board of

] 2 r a M t h g i R _ e l b a T [ the Shanghai Stock Exchange (the "Sci-Tech Board"). Generally, the Sci-Tech Board has a higher PE with an average PE of about 118x, as it attracts sectors such as pharmaceuticals, software and semiconductors, which usually have high valuations. So far there is only one auto solution provider listed on the Sci-Tech Board, Autel Intelligent Technology Corp (688208 CH) with a trailing PE of 67.5x. Recently, Semiconductor Manufacturing International Corp. ("SMIC") (00981 HK) is currently at the offering period and was oversubscribed 566x in the first day. We expect a similar response for Geely Auto due to its popular name in China as a leading Chines brand. Upon completion, Geely Auto will be the first OEM to be listed on this new exchange,

with market capitalization possibly once again exceeding HK$200 billion. Since Geely Auto has been relatively stable without changes to the Company’s structure and with sound governance, we expect the Company to pass the consultation period on time (i.e. July 2020).

(00175 HK)

Figure-5: Sci-Tech Board PER

X Average PE (Trailing) 吉利汽车 300.00

250.00

200.00

150.00

100.00 Geely Automobile 50.00

Mining

Internet

Software

Iron/Steel

Chemicals

Electronics Computers

Biotechnology

Semiconductors

Pharmaceuticals

Building Materials

HomeFurnishings

Healthcare-Products

Telecommunications

Hand/Machine Tools

CommercialServices

Machinery-Diversified

EnvironmentalControl

Auto Parts&Equipment Energy-Alternate Sources Miscellaneous Manufactur Source: Bloomberg, Guotai Junan International. Note: PER as at 7 Jul. 2020.

Table-2: Effect in Shareholdings and Market Value of RMB Shares Issue Percentage of issued Market price

Before Immediately after capital (HKD) * Market value (HKD)

H - Shares 9,812,776,540 9,812,776,540 85% 20 196,256

Report

RMB Shares ^ 0 1,731,666,448 15% 18 31,170

Total 9,812,776,540 11,544,442,988 100% 227,426 Company Note ^: Number of RMB shares to be issued will be limited to not more than 15% of the Company's issued share capital as at 23 Jun. 2020. Note*: Market price of H-Shares is our current target price. While we discount 10% of RMB shares as reference to SIMC (981 HK). Source: the Company, Guotai Junan International. See the last page for disclaimer Page 3 of 7 [Table_PageHeader]Geely Automobile (00175 HK)

Table-3: Summary of Financial Forecasts 2018A 2019A 2020F 2021F 2022F

Sales volume (units) 1,500,838 1,361,560 1,336,144] 1 r a M 1,633,746t h g i R _ e 1,692,685l b a T [

yoy 20.4% -9.3% -1.9% 22.3% 3.6% Blended ASP - RMB/unit (Geely only) 74,362 74,422 75,910 77,429 78,977 yoy 1.0% 0.1% 2.0% 2.0% 2.0%

Sales revenue (RMB mn) 106,595 97,401 93,478 115,376 122,376 yoy 14.9% -8.6% -4.0% 23.4% 6.1% Gross profit 21,513 16,917 16,250 20,721 22,942 yoy 19.6% -21.4% -3.9% 27.5% 10.7% Share of profit of JV 505 626 1,378 1,861 1,910 yoy 15953.6% 24.0% 120.1% 35.1% 2.6% 9July 2020 Shareholders' profit 12,553 8,190 8,880 11,091 12,729 yoy 18.1% -34.8% 8.4% 24.9% 14.8% Gross profit margin 20.2% 17.4% 17.4% 18.0% 18.7% Operating margin 13.6% 8.9% 9.8% 9.7% 10.6% Net profit margin 11.8% 8.4% 9.5% 9.6% 10.4% EPS 3-year CAGR 75.9% 15.9% -7.5% -7.5% 12.1% Source: the Company, Guotai Junan International.

VALUATION

Industry recovery trend has been obvious in 2Q20, with Geely Auto’s growth to outperform the market. We believe Geely Auto’s leading position will continue to solidify, seeing its market share continuing to increase this year. We expect that sales in 3Q20 will slightly slow down on higher base and fading out effect form pent-up demand. On the other hand, the Company’s stock price has

reacted positively since the announcement of the Company’s plan to list on the Science and Technology] 2 r a M Innovationt h g i R Board_ e l of b thea T [

Shanghai Stock Exchange. We expect that the capital raised will be a massive support to Geely Auto’s growth strategy. Geely Auto is our sector top pick due to its robust growth strategy, particularly its strong product pipeline. The Company has been generating a 1-month relative return of 32.5%. The Company is also trading at a very high valuation of 12-month forward PER of 16.5x. Nonetheless, based on the current market sentiment and Company’s positive outlook, we believe that it can maintain the current valuation. We have increased our TP to HK$20.00 due to rerating of the Company, and have maintained investment rating as "Accumulate". Our TP represents 16.5x 2021 PER and 14.3x 2022 PER.

Figure-6: PER of Geely Auto Figure-7: PER Range of Geely Auto

Forward P/E Avg (x) Geely (x) 30.00 30.0 +1 S.D. -1 S.D. (00175 HK) 24.07 +2 S.D. -2 S.D. 25.0 25.00 20.01 20.0 20.00 16.94 16.34 17.19 14.51 吉利汽车 15.0 12.90 15.00 12.67 12.37 12.64 15.75 13.43 10.67 10.0 10.82 10.88 10.8510.24 10.00 9.78 9.88 9.68 10.19 10.86 5.0 7.84 9.00 9.48 5.00 7.73 0.0 7.19 6.64 7.36 5.59 5.94 5.94 6.39 5.57

0.00 Geely Automobile

Jul-11 Jul-12 Jul-13 Jul-14 Jul-16 Jul-18 Jul-19 Jul-20 Jul-17 Jul-15 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD

Source: Bloomberg, Guotai Junan International. Source: Bloomberg, Guotai Junan International.

Report

Company

See the last page for disclaimer Page 4 of 7 [Table_PageHeader]Geely Automobile (00175 HK)

Table-4: Peers comparison Last price PE PB ROE(% D/Y(%) EV/EBITD

] 1 r a M t h g i R _ e l b a T [

Company Stock Code Currency 19A 20F 21F 22F 19A 20F 21F 22F 20) F 20F 20AF

Dongfeng Motor-H 489 HK HKD 5.15 3.0 3.7 3.2 3.0 0.3 0.3 0.3 0.3 9.2 7.0 17.3

Geely Automobile 175 HK HKD 17.00 16.7 17.2 14.2 13.0 2.7 2.3 2.1 1.8 15.1 1.8 9.1

Brilliance China 1114 HK HKD 8.26 5.4 5.5 4.7 4.9 1.1 1.0 0.8 0.7 19.0 4.0 n.a.

Great Wall Mot-H 2333 HK HKD 5.89 10.6 12.6 9.7 8.9 0.9 0.9 0.8 0.8 8.8 4.3 6.5

Qingling Motor-H 1122 HK HKD 1.43 9.0 n.a. n.a. n.a. 0.4 n.a. n.a. n.a. n.a. n.a. n.a.

Byd Co Ltd-H 1211 HK HKD 74.00 130.5 67.3 59.1 48.5 3.4 3.1 3.0 2.8 5.2 0.2 15.6 9July 2020

Guangzhou Auto-H 2238 HK HKD 6.68 9.1 8.6 6.7 6.0 0.8 0.7 0.7 0.6 10.2 4.6 20.0

Baic Motor-H 1958 HK HKD 3.90 6.9 8.6 6.5 5.6 0.6 0.6 0.5 0.5 8.1 4.9 0.7

Weichai Power-H 2338 HK HKD 16.80 12.9 12.6 11.1 10.4 2.6 2.3 2.0 1.8 19.0 3.1 4.7

Sinotruk Hk Ltd 3808 HK HKD 22.55 16.4 12.5 11.9 11.5 2.0 1.8 1.7 1.5 14.9 3.1 4.3

Simple Average 22.0 16.5 14.1 12.4 1.5 1.4 1.3 1.2 12.2 3.6 9.8 Weighted Average 42.8 26.3 22.7 19.4 2.2 1.9 1.8 1.6 11.6 2.7 10.4

Dongfeng Auto-A 600006 CH CNY 4.4 20.0 15.8 16.4 n.a. 1.2 n.a. n.a. n.a. n.a. n.a. n.a.

Great Wall Mo-A 601633 CH CNY 9.2 18.7 19.6 15.1 13.9 1.5 1.5 1.4 1.3 9.2 2.5 6.5

Faw Car Co Ltd-A 000800 CH CNY 13.0 400.6 n.a. n.a. n.a. 0.7 2.2 2.3 2.2 4.7 n.a. n.a.

Saic Motor-A 600104 CH CNY 19.18 8.8 10.0 8.1 7.5 0.9 0.9 0.8 0.7 9.9 5.0 6.3

Chongqing Chan-A 000625 CH CNY 12.94 n.a. 17.3 14.7 12.6 1.4 1.3 1.2 1.1 8.0 1.2 5.5

Weichai Power-A 000338 CH CNY 15.53 13.5 12.6 11.3 10.8 2.7 2.3 2.0 1.8 18.5 3.1 4.9

] 2 r a M t h g i R _ e l b a T [

Beiqi Foton-A 600166 CH CNY 1.99 68.4 n.a. n.a. n.a. 0.8 n.a. n.a. n.a. n.a. n.a. n.a.

Anhui Jianghua-A 600418 CH CNY 9.95 165.8 56.2 33.7 24.1 1.5 1.4 1.3 1.3 3.2 1.3 6.5

Cnhtc Jinan T-A 000951 CH CNY 30.99 17.0 14.6 13.5 12.2 3.0 2.6 2.5 2.3 16.3 2.1 n.a.

Zhengzhou Yut-A 600066 CH CNY 12.99 14.8 14.4 12.7 11.9 1.7 1.6 1.5 1.4 10.7 4.8 8.8

Xiamen King Lo-A 600686 CH CNY 6.10 25.4 n.a. n.a. n.a. 1.0 n.a. n.a. n.a. n.a. n.a. n.a.

Jiangling Moto-A 000550 CH CNY 15.05 87.9 41.0 32.9 26.4 1.2 1.2 1.2 1.2 2.7 1.7 0.6

Yangzhou Yax-A 600213 CH CNY 7.41 123.5 n.a. n.a. n.a. 9.4 n.a. n.a. n.a. n.a. n.a. n.a.

Zhongtong Bus-A 000957 CH CNY 7.17 128.5 20.5 n.a. n.a. 1.6 n.a. n.a. n.a. n.a. n.a. n.a.

Simple Average 80.4 22.4 17.6 0.0 2.1 1.7 1.6 0.0 9.2 2.7 5.6 Weighted Average 79.5 15.0 12.1 10.4 1.8 1.8 1.7 1.5 10.6 2.0 4.2

Nissan Motor Co 7201 JP JPY 391.20 4.8 n.a. n.a. 11.7 0.3 0.4 0.4 0.4 (9.8) 2.8 3.6

(00175 HK) Toyota Motor 7203 JP JPY 6,728.00 10.3 9.1 16.6 10.3 1.0 0.9 0.9 0.9 6.1 2.9 14.7

Honda Motor Co 7267 JP JPY 2,726.00 7.9 10.5 15.3 8.7 0.6 0.6 0.6 0.5 3.7 3.3 11.0

Mazda Motor 7261 JP JPY 653.00 6.5 33.9 n.a. 53.5 0.3 0.3 0.4 0.4 (7.2) 2.9 36.9

吉利汽车 Mitsubishi Heavy 7011 JT JPY 2,571.00 8.5 9.9 87.7 14.1 0.6 0.7 0.7 0.7 1.8 3.4 9.0

Fuji Heavy Indus 7270 JP JPY 2,222.00 11.5 11.2 20.7 11.2 1.1 1.0 1.0 1.0 4.1 3.5 4.4

Suzuki Motor 7269 JP JPY 3,794.00 9.6 13.2 23.7 13.9 1.3 1.2 1.2 1.1 4.8 1.6 7.5

Hino Motors Ltd 7205 JP JPY 706.00 7.4 12.9 234.2 15.0 0.7 0.7 0.7 0.7 0.1 1.3 8.6

Isuzu Motors 7202 JP JPY 949.70 6.3 8.6 20.9 9.8 0.8 0.7 0.7 0.7 4.2 2.5 7.1

Simple Average 8.1 13.7 59.9 16.5 0.7 0.7 0.7 0.7 0.9 2.7 11.4 Weighted Average Geely Automobile 9.6 9.6 20.4 11.0 0.9 0.9 0.8 0.8 4.4 2.9 12.7

Hyundai Motor 005380 KS KRW 99,600.00 8.8 10.0 6.2 5.5 0.3 0.4 0.4 0.3 5.4 4.3 9.4

Ford Motor Co F US USD 6.12 612.0 n.a. 14.5 7.6 0.7 0.9 1.0 1.0 4.6 1.8 3.1

Navistar Intl NAV US USD 27.17 12.2 n.a. 18.5 9.4 n.a. n.a. n.a. n.a. (7.8) 0.0 8.3

Paccar Inc PCAR US USD 75.77 11.0 27.3 17.5 13.3 2.7 2.7 2.6 2.5 15.8 2.5 12.1

Volkswagen Ag VOW GR EUR 143.60 5.4 16.3 6.9 5.4 0.7 0.6 0.6 0.5 8.4 3.8 2.4

Bayer Motoren Wk BMW GR EUR 58.18 7.8 15.5 8.8 7.1 0.6 0.6 0.6 0.6 7.2 3.8 11.9

Daimler Ag DAI GR EUR 37.59 16.9 95.4 10.2 6.6 0.7 0.7 0.6 0.6 6.2 3.2 0.8

Man Se MAN GR EUR 47.45 9.8 n.a. n.a. n.a. 1.2 n.a. n.a. n.a. n.a. n.a. n.a.

Renault Sa RNO FP EUR 23.09 n.a. n.a. 9.7 3.6 0.2 0.2 0.2 0.2 2.3 2.7 2.4

Volvo Ab-B VOLVB SS SEK 155.20 8.8 28.7 15.0 12.0 2.3 2.1 2.0 1.9 13.7 5.0 6.7

General Motors C GM US USD 19.00 5.4 24.5 10.9 6.1 4.0 8.3 5.8 10.7 209.7 0.0 9.9

Tata Steel Ltd TATA IN INR 330.30 3.7 24.3 n.a. 7.9 0.6 0.5 0.6 0.5 (2.3) 2.7 10.0 Simple Average 58.7 30.3 11.3 7.4 1.2 1.6 1.4 1.7 22.5 2.9 6.5

Weighted Average 55.6 26.8 9.8 7.2 1.0 1.0 0.9 0.9 8.8 3.5 5.3

Global Simple Average 42.3 23.1 14.3 6.6 1.6 1.6 1.4 1.0 14.6 3.1 7.3 Report

Global Weighted 37.5 19.1 16.0 10.7 1.2 1.1 1.1 1.0 7.6 3.0 8.9 Source:Average the Company, Guotai Junan International.

Company

See the last page for disclaimer Page 5 of 7 [Table_PageHeader]Geely Automobile (00175 HK)

Financial Statements and Ratios

[Table_IncomeStatement] Income Statement [Table_BalanceSheet] ] 1 Balancer a SheetM t h g i R _ e l b a T [

Year end 31 Dec (RMB m) 2018A 2019A 2020F 2021F 2022F Year end 31 Dec (RMB m) 2018A 2019A 2020F 2021F 2022F Total Revenue 106,595 97,401 93,478 115,376 122,376 PPE 23,423 27,070 28,214 29,458 30,560 Cost of sales (85,082) (80,485) (77,228) (94,655) (99,435) Intangible assets 14,993 17,598 21,867 27,256 32,954 Gross profit 21,513 16,917 16,250 20,721 22,942 Interest in associates and JV 6,322 8,837 9,188 9,671 10,263 Prepaid land lease payment 3,268 3,231 3,554 3,909 4,300 Distribution expenses (4,523) (4,332) (4,158) (5,132) (5,443) Deferred tax assets 643 866 959 1,073 1,205

Administration expenses (3,777) (5,122) (4,114) (5,573) (5,649) Others 26 312 312 312 312 9July 2020 Operating Profit 13,213 7,462 7,978 10,017 11,850 Total Non-current Assets 48,676 57,914 64,094 71,679 79,594

Share of results of Asso. and JV 445 664 1,383 1,855 1,923 Cash & Cash Equivalents 15,737 19,281 23,913 28,793 31,835 Other income 1,237 1,408 1,183 1,173 1,158 Pledged deposit 19 40 44 47 51 Finance costs, net 79 108 (29) 37 105 Inventories 4,097 4,821 4,125 4,908 5,019 Share-based payment (15) (5) (10) (8) (9) Trade and other receivables 22,865 25,845 23,374 28,849 30,600 Profit Before Tax 14,959 9,636 10,505 13,074 15,027 Prepaid land lease payment 67 0 0 0 0 Others 0 27 30 33 37 Income Tax (2,285) (1,375) (1,552) (1,898) (2,201) Total Current Assets 42,785 50,014 51,485 62,631 67,541 profit After Tax 12,674 8,261 8,953 11,175 12,826 Total Assets 91,461 107,928 115,579 134,310 147,134 Non-controlling Interest (121) (72) (73) (84) (97) Shareholders' Profit / Loss 12,553 8,190 8,880 11,091 12,729 Trade payables 41,438 47,873 42,849 52,518 55,170 Bank borrowing 1,375 0 0 0 0 Basic EPS 1.398 0.902 0.942 1.106 1.269 Other liabilities 947 653 705 871 995 Diluted EPS 1.398 0.902 0.942 1.106 1.269 Total Current Liabilities 43,760 48,526 43,554 53,389 56,164 Dividend per share (RMB) 0.350 0.250 0.319 0.402 0.466 Senior notes 0 0 0 0 0

] 2 r a M t h g i R _ e l b a T [

LT borrowing 0 2,089 1,649 1,236 824 Bond payables 2,048 2,060 2,100 2,100 2,100 Deferred tax liabilities [Table_CashFlowStatement] Cash Flow Statement 278 301 598 962 1,384 Others 0 26 26 26 26 Total Non-current Liabilities 2,326 4,477 4,373 4,325 4,334 Year end 31 Dec (RMB m) 2018A 2019A 2020F 2021F 2022F EBT 14,959 9,636 10,505 13,074 15,027 Total Liabilities 46,086 53,003 47,927 57,714 60,499 Depreciation and amortization 2,413 3,733 2,291 2,885 3,113 Finance cost 114 128 265 255 246 Total Shareholders' Equity 44,944 54,436 67,090 75,950 85,892 Interest income (193) (236) (236) (292) (352) Minority Interest 431 489 562 646 743 Changes in working capital (619) 1,977 (1,858) 3,410 791 Total Equity 45,375 54,924 67,652 76,596 86,635

Share of results of associates (445) (664) (1,383) (1,855) (1,923) BPS(RMB) 5.004 5.938 7.474 8.461 9.569 Exchange gain/(losses) 226 (9) 59 80 0

Income taxes paid (2,621) (1,949) (1,552) (1,898) (2,201) Change of other operating Items 91 (79) (47) 46 (16) Financial Ratios Cash from Operating Activities 13,925 12,538 8,044 15,704 14,686

(00175 HK) 2018A 2019A 2020F 2021F 2022F Net investments in PPE (2,208) (2,864) (2,536) (2,700) (2,618) Profitability Net change of prepaid land lease (179) (96) (323) (355) (391) Gross profit margin (%) 20.2 17.4 17.4 18.0 18.7 Net change of intangible assets (5,027) (4,606) (4,270) (5,389) (5,698) EBITDAR (%) 15.7 9.6 13.7 13.8 14.7

Net change of pledged deposit 17 (21) (3) (3) (4) EBIT Margin (%) 14.0 9.6 11.3 11.3 12.2 吉利汽车 Interest income 193 236 236 292 352 Net profit margin (%) 11.8 8.4 9.5 9.6 10.4 Net investments in Asso. and JV (1,073) (1,851) (1,480) (1,184) (947) ROE (%) 31.6 16.5 14.6 15.5 15.7 Others (3,042) (1,589) 1,809 1,335 1,107 ROA (%) 13.7 7.6 7.7 8.3 8.7 Cash from Investing Activities (11,319) (10,791) (6,568) (8,005) (8,199) Growth Net change of LT bank loan 1,927 4,101 (412) (412) (412) Sales volume growth (%) 20.4 -9.3 -1.9 22.3 3.6 Issuance of senior notes 0 0 0 0 0 Revenue growth (%) 14.9 -8.6 -4.0 23.4 6.1

Issuance of shares 36 639 5,832 0 0 EPS (%) 17.5 -35.5 4.4 17.4 14.8 Geely Automobile Interest paid (73) (124) (265) (255) (246) BPS (%) 30.3 21.0 23.2 13.2 13.1 Dividend paid (2,161) (2,806) (2,058) (2,231) (2,787) Others (35) (48) 0 0 0 Liquidity and solvency Cash from Financing Activities (306) 1,763 3,097 (2,899) (3,445) Gearing ratio (%) net cash net cash net cash net cash net cash Cash ratio 0.4 0.4 0.5 0.5 0.6 Net Changes in Cash 2,300 3,510 4,573 4,800 3,042 Quick ratio 0.9 0.9 1.1 1.1 1.1 Other adjustment 23 34 59 80 0 Current ratio 1.0 1.0 1.2 1.2 1.2 Cash at Beg of Year 13,415 15,737 19,281 23,913 28,793 Cash at End of Year 15,737 19,281 23,913 28,793 31,835 Efficiency Inventory turnover 21 22 23 24 24 Source: the Company, Guotai Junan International. Days receivable 96 91 91 91 91 Days payable 191 203 203 203 203

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Company

See the last page for disclaimer Page 6 of 7 [Table_PageHeader]Geely Automobile (00175 HK)

Company[Table_CompanyRatingDefinition] Rating Definition

The Benchmark: Hong Kong Hang Seng Index ] 1 r a M t h g i R _ e l b a T [

Time Horizon: 6 to 18 months

Rating Definition

Buy 买入 Relative Performance>15%; or the fundamental outlook of the company or sector is favorable. Accumulate 收集 Relative Performance is 5% to 15%;

or the fundamental outlook of the company or sector is favorable. 9July 2020 Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral. Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable.

Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable.

Sector[Table_ RatingIndustry DefinitionRatingDefinition] The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Outperform 跑赢大市 Relative Performance>5%;

] 2 r a M t h g i R _ e l b a T [ or the fundamental outlook of the sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform 跑输大市 Relative Performance<-5%; Or the fundamental outlook of the sector is unfavorable.

[DISCLOSURETable_DISCLOSUREOFINTERESTS OF INTERESTS ]

(1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for GUOTAI JUNAN I (01788 HK),JINSHANG BANK (02558 HK),ZHONGLIANG HLDG (02772 HK),BINHAI INVESTMENT (02886 HK),HAITIAN ANTENNA (08227 HK),Guotai Junan and its group companies do not hold equal to or more than 1% of the market

capitalization of the issuer mentioned in this Research Report. (00175 HK) (4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months. (5) Guotai Junan and its group companies are not making a market in the securities in respect of the issuer mentioned in this Research

Report. 吉利汽车 (6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies.

DISCLAIMER Geely Automobile

This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily).

Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan.

Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision.

This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject

Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction.

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See the last page for disclaimer Page 7 of 7