股 票 研 [Table_Title] Company Report: Geely Automobile (00175 HK) Toliver Ma 马守彰 究 (852) 2509 5317 Equity Research 公司报告： 吉利汽车 (00175 HK) [email protected] 31 March 2020 [Table_Summary] A Long-Term Competitor, Maintain "Accumulate" 一个长期的竞争者，维持“收集” Geely Auto’s 2019 profit attributable to shareholders was down 34.8% [Table_Rank] 公 yoy to RMB8,190 million, below market and our expectations. Revenue Rating: Accumulate Maintained decreased by 8.6% as dragged by weak vehicle sales (-10.6% yoy). ASP 司 stayed flat despite sales mix improvement, which was offset by higher 评级： 收集 (维持) 报 customer incentives. Gross margin dropped by 2.8 ppts yoy to 17.4%. In 告 terms of cost, R&D expense was up 56% and drove up administrative expenses. Share of profit from auto finance business doubled yoy but the 6[Table_Price-18m TP 目标价] : HK$12.82 Company Report Lynk & Co. JV profit was down 27%. The Board proposed final dividend of Revised from 原目标价: HK$16.50 HK$0.25 per share, which represents a payout ratio of 25.1% (vs. 2018: Share price 股价: HK$11.280 22.0%). A long-term competitor in the auto industry. We expect that Geely will benefit from the market consolidation and consumption upgrade in China. Its Stock performance leading position will extend into 2020 as propelled by its new model launches. 股价表现 These models will be mainly underpinned by its modular platform, which 30.0 should maintain relatively superior profitability. % of return 20.0 We have adjusted downwards shareholders’ profit in 2020 and 2021 by 20.6% and 19.2%, respectively, on lowered sales and margin. 10.0 证 0.0 券 告 We have reduced our TP to HK$12.82 on reduced earnings forecasts but maintain investment rating as "Accumulate". Our TP represents 9.3x (10.0) 研 报 2019 PER and 8.1x 2020 PER. Similar to most OEMs, the current valuation is (20.0) below the mean by about 1 S.D., which should reflect investor pessimism of (30.0) 究 究 the industry. However, we believe there is a possibility of re-rating in the 报 (40.0) 研 future through the possibility of these two events: 1) new government policies Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 in 2Q20; or 2) more details regarding the merger with Volvo in 2020. 告 HSI Index GEELY AUTOMOBILE 券 Equity Research Report 吉利汽车 2019 年股东利润同比下降 34.8%至人民币 81.9 亿元，低于市场和我们的预期。 证 受汽车销售疲软（同比跌 10.6%）的拖累，收入下降 8.6%。尽管销售组合有所改善，但 被更高的客户激励所抵消，使得平均销售价格持平。毛利率同比下降 2.8 个百分点至 [Table_PriceChange] Change in Share Price 1 M 3 M 1 Y [Tab 。 在成本方面，研发费用增加了 ，导致管理费用增加。来自汽车金融业务的 17.4% 56% 股价变动 个月 个月 年 1 3 1 le_I 应占利润同比增长一倍，但领克合资公司利润下降了 27%。董事会建议派发末期股息每股 Abs. % (18.6) (26.4) (24.8) 汽 0.25 港元，相当于 25.1%的派息率（2018 年：22.0%）。 绝对变动 % nfo1 Rel. % to HS Index 车 (7.3) (8.2) (4.6) 汽车行业的长期竞争者。我们预计吉利汽车将从中国的市场整合和消费升级中受益。在新 相对恒指变动 % 及 Avg. Share price(HK$) ] 车型的带动下，其领先地位将在 2020 年延续。这些车型将主要以其模块化平台为基础， 12.4 13.9 13.6 平均股价（港元） 零 并能够保持相对较高的盈利能力。 Source: Bloomberg, Guotai Junan International. 部 我们将 2020 年至 2021 年的股东利润分别下调 20.6%及 19.2%以反映销售量和毛利率假 件 设的下调。 行 由于下调盈利预测，我们下调目标价至 12.82 港元，但维持投资评级为“收集”。我们的 业 目标价相当于 9.3 倍 2019 年市盈率和 8.1 倍 2020 年市盈率。与大多数主机厂相似，公司 当前估值低于均值约 1 个标准差，这应反映出投资者对行业的悲观情绪。但我们认为未来 其估值可能因以下两件事而获得重估：1）新的政府刺激政策将于 2020 年第 2 季度出台； Automobiles & Components Sector Automobiles & Components 2）有关 2020 年与沃尔沃合并的更多细节。 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 7.1 5.004 2.0 0.350 3.5 31.6 nfo2 2019A 97,401 8,190 0.902 (35.5) 11.2 5.938 1.7 0.250 2.5 16.5 中] 2020F 100,159 9,679 1.066 18.2 9.4 6.913 1.5 0.347 3.5 16.6 2021F 112,839 11,169 1.230 15.4 8.2 7.887 1.3 0.405 4.0 16.8 吉外 2022F 118,824 12,758 1.405 14.2 7.1 8.995 1.1 0.467 4.7 16.8 利运 汽 [Table_BaseData]Shares in issue (m) 总股数 (m) 9,167.0 Major shareholder 大股东 Geely Holding 42.7% 输 Market cap. (HK$ m) 市值 (HK$ m) 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) 57,810.1 FY20 Net gearing (%) FY20 净负债/股东资金 (%) net cash 52 Weeks high/low (HK$) 52 周高/低 (HK$) 19.140 / 10.000 FY20 Est. NAV (HK$) FY20 每股估值（港元） 13.6 Source: the Company, Guotai Junan International. Geely Automobile (00175Geely HK) Automobile See the last page for disclaimer Page 1 of 9 [Table_PageHeader]Geely Automobile (00175 HK) 2019 RESULTS REVIEW ] 1 r a M t h g i R _ e l b a T [ Geely Auto’s (the "Company") 2019 profit attributable to shareholders was down 34.8% yoy to RMB8,190 million, below market and our expectations. Key highlights are discussed below: Revenue decreased 8.6% yoy to RMB97,401 million, mainly dragged by volume decrease. During the year, vehicle sales (excluding Lynk & Co.) decreased by 10.6% to 1,234,081 units. Despite sales of new models such as the Binyue, March 2020 Boyue and Xingyue being strong, performance was still was dragged by some of the older models. 2H19 sales improved 1 3 as the overall market environment was better after the change of emission standards in Jun. 2019. Sales mix improved. Average ASP (excluding Lynk & Co.) was flat. Despite that product mix improved, it was offset by the higher customer incentives given. Gross margin dropped. Gross margin dropped more than our expectation. In 2019, gross margin decreased 2.8 ppts yoy to 17.4%. We believe the effect of the implementation of China 6 emission standards continued in 3Q19, affecting its margin as a result. Cost ratio increased. Administrative expense ratio rose by 1.7 ppts, mainly due to research and development costs increasing by 56.0% yoy. Auto finance business continued to shine. Share of results of invested entities increased 49.3% yoy in 2019 as improvement was seen from its auto finance business, Genius AFC. Net profit from auto finance business increased more than double to RMB509 million in 2019 on strong auto finance penetration. Lynk & Co. brand recorded net profit of of ] 2 r a M t h g i R _ e l b a T [ RMB486 million, a yoy decline of 27%. Despite sales volume having increased for Lynk & Co. brand, we think the reduction in profit was mainly due to gross margin decrease as ASP should be reduced as the Lynk 02 and 03 (only started selling in 2H18) have lower selling price, and 2) more operating cost from the operations of the Zhengjiakou factory. The Company recorded net finance income of RMB108 million in 2019, an increase of 36.7% yoy. Net margin decreased 3.4 ppts accordingly as gross margin decreased and administrative expenses increased. The Board proposed final dividend of HK$0.25 per share, which represents a payout ratio of 25.1% (vs. 2018: 22.0%) . Table-1: Summary of 2019 Results of Geely Auto 2019 2018 YoY 2H19 1H19 HoH In RMB mn, except for per share item Revenue 97,401 106,595 -8.6% 49,843 47,559 4.8% (00175 HK) COGS (80,485) (85,082) -5.4% (41,395) (39,090) 5.9% Gross profit 16,917 21,513 -21.4% 8,448 8,469 -0.3% (4,332) (4,523) -4.2% (2,076) (2,256) -8.0% Distribution and selling expenses Administrative expenses (5,122) (3,777) 35.6% (2,667) (2,455) 8.7% 吉利汽车 Operating profit 8,687 14,450 -39.9% 4,929 3,758 31.2% Finance income / (costs), net 108 79 36.7% 59 49 22.1% Other income 1,225 1,237 -1.0% 612 613 -0.1% Share-based payments (5) (15) -62.6% (2) (3) -37.0% Share of results of Asso. and JV 664 445 49.3% 315 349 -9.6% EBT 9,636 14,959 -35.6% 4,872 4,765 2.2% Income tax (1,375) (2,285) -39.8% (657) (718) -8.4% Profit for the period 8,261 12,674 -34.8% 4,214 4,047 4.1% Geely Automobile Profit for equity shareholders 8,190 12,553 -34.8% 4,180 4,009 4.3% Non-controlling interests 72 121 -40.8% 34 38 -9.1% Basic EPS (RMB) 0.9019 1.3985 -35.5% 0.4580 0.4439 3.2% Diluted EPS (RMB) 0.9123 1.3711 -33.5% 0.4731 0.4392 7.7% Source: the Company, Guotai Junan International. Table-2: Key Operating Data 2019 2018 YoY 2H19 1H19 HoH Key Operating Data Government subsidies 845 993 -14.8% 346 500 -30.8% Sale volume (unit) – Geely Brand 1,234,081 1,380,424 -10.6% 642,413 591,668 8.6% Sale volume (unit) – Lynk & Co. 127,479 120,414 5.9% 71,602 55,877 28.1% Domestic sales (units) 1,176,090 1,352,891 -13.1% 567,164 608,926 -6.9% Export sales(unit) 57,991 27,533 110.6% 19,372 38,619 -49.8% ASP(RMB/unit) (Exclude Lynk & Co.) 74,286 74,286 0.0% 77,587 76,021 2.1% Key Ratio ppts ppts Gross profit margin (%) 17.4% 20.2% (2.8) 16.9% 17.8% (0.9) Operating profit margin(%) 8.9% 13.6% (4.6) 9.9% 7.9% 2.0 Net profit margin (%) 8.4% 11.8% (3.4) 8.4% 8.4% (0.0) Distribution costs/ revenue(%) 4.4% 4.2% 0.2 4.2% 4.7% (0.6) Report Admin costs / revenue(%) 5.3% 3.5% 1.7 5.4% 5.2% 0.2 Effective tax rate(%) 14.3% 15.3% (1.0) 13.5% 15.1% (1.6) Source: the Company, Guotai Junan International.