Geely Automobile’s total revenue reached a new high in 2023, and the achievements of new energy transformation were highlighted.

On March 20th, Geely Automobile (00175.HK) announced its financial report for 2023, and the company achieved an operating income of 179.2 billion yuan, a year-on-year increase of 21%, a record high. The net profit of returning to the mother reached 5.308 billion yuan, compared with 3.511 billion yuan after deducting the one-time bargaining acquisition income in 2022, a year-on-year increase of 51%; The net cash level increased by 46% year-on-year to RMB 28.4 billion, and the reserves were abundant and stable.

The financial report shows that Geely Automobile’s profitability has improved significantly, and the gross profit situation has improved due to product structure optimization, cost reduction and scale effect. The total gross profit has increased by 31% year-on-year to 27.4 billion yuan, and the gross profit margin has increased from 14.1% in 2022 to 15.3% in 2023.

Behind the bright financial data is the strong market growth potential of Geely Automobile. According to the data of the Federation, in 2023, the cumulative retail volume of domestic passenger cars was 21.699 million, a year-on-year increase of 5.6%. Under the background that the overall growth of the automobile industry is slowing down and the market competition is becoming increasingly fierce, Geely Automobile has exceeded its annual target of 2023, with a cumulative sales volume of 1,686,500 vehicles, up about 18% year-on-year, and its annual sales volume has reached a record high. At the same time, Geely Automobile has also become one of the few car companies that successfully completed the annual sales target.

It is worth noting that the new energy vehicle business has become a strong support for Geely’s performance growth. In 2023, the domestic new energy vehicle market still maintained a growth trend, and the cumulative wholesale sales volume of new energy passenger cars was 8.864 million, a year-on-year increase of 36.3%.

In this context, Geely Automobile’s sales of new energy vehicles still outperformed the broader market in 2023, with a year-on-year increase of 48%, a penetration rate of 29%, and a monthly penetration rate of over 40%.

Among them, the brand-new middle and high-end new energy brand "Geely Yinhe" series has rapidly brought three products, namely Yinhe L7, Yinhe L6 and Yinhe E8, to the market since it was released in February last year, forming a product layout of pure electric+hybrid electric, car +SUV in the mainstream new energy market, and achieving a cumulative sales volume of over 110,000 vehicles in nine months after listing. Since the release of the brand, Geely Galaxy has continuously strengthened its "high-value reputation", and its models are equipped with self-developed Aegis battery safety system, Raytheon hybrid, Galaxy N OS and other technological configurations, becoming the "king of volume" in the mainstream new energy market.

At present, the Krypton brand has firmly established itself in the luxury intelligent pure electric market. 2023 is a year of accelerated evolution of Krypton, and two new models have been launched, and the product matrix continues to expand. In 2023, a total of 118,700 vehicles were delivered, a year-on-year increase of 65%. As of December 31, 2023, the cumulative delivery of Extreme Krypton brand exceeded 190,000, setting a new record for the delivery speed of new forces, and its four models have become the benchmark of market segments.

In addition, the electrification transformation of the Lectra brand has also achieved good results. In 2023, Lectra brand launched a number of new energy vehicles equipped with plug-in hybrid technology, such as Lectra 09, Lectra 08 and Lectra 06. Among them, the sales volume of LEEK 08EM-P increased steadily after its listing, and it became a hot-selling product in the high-end plug-in SUV market. According to the data in December 2023, the new energy vehicles of the Lectra brand account for 55.3% of the total monthly sales, and the electrification transformation is expected in the future.

At the same time, Geely Holding Group has owned a number of listed companies, which also provides a more solid foundation and support for Geely Automobile’s future performance growth. For example, Lotus, which recently listed on the US stock market, has aroused widespread concern in the industry.

"The listing of sub-brands including Lotus has important positive significance for consolidating the core business of Geely Holding. Geely Holding and its global strategic partners have maintained continuous, stable and growing cooperation for a long time in terms of technology authorization and technology research and development services. The development of sub-brands has created a good foundation for Geely Holding’s internal collaboration and cooperation with Geely Automobile based on the principle of marketization, and also brought opportunities for revenue growth for Geely Automobile Group. " Li Donghui, CEO of Geely Holding Group, Vice Chairman and Executive Director of Geely Automobile Holdings Limited, said.

At present, the competition of electric vehicles has entered the intelligent competition in the second half. It is very important for major car companies to master the core technologies in the intelligent field and apply them on a large scale, which is also the key to win the competition.

For Geely Automobile, intelligence is also its key business area. In 2023, Geely Automobile’s strategic layout in intelligence gradually ushered in the "harvest period", and the results of "Smart Geely 2025" successively landed.

For example, in February 2023, Geely Star Smart Computing Center was officially launched, becoming a smart computing center with leading self-built equipment scale, leading comprehensive computing power, leading business coverage, leading intelligent support capability and high security level among domestic car companies. In January, 2024, Geely Xingrui AI model was officially released, leading the AI era of China automobile in full scene.

In the field of intelligent driving and intelligent cockpit, the satellite communication technology of "integration of heaven and earth" has been initially constructed. At present, two orbital surfaces have been launched and deployed, and there are 20 satellites in orbit. Geely Yinhe E8 and Kyk-krypton 007 models have taken the lead in carrying self-developed satellite communication technology. In the case of no ground network coverage or damage to the ground network, users can send and receive satellite messages through the car to realize safe travel and "never lose contact".

In addition, the Geely NOA advanced intelligent driving assistance system and the Lectra NOA intelligent driving system have been opened, and the extremely high-speed autonomous navigation assistance of NZP has been opened in 22 cities including Shanghai, Hangzhou and Guangzhou. Starting from the second quarter of this year, the city NZP will also open the first batch of users’ public beta in the national core cities.

Thanks to the core intelligent technology, Geely Automobile’s product strength has grown strongly, and in the new round of market ‘ Inner volume ’ It is expected to form differentiated competition and win the initiative. In the beginning of 2024, the domestic auto market set off a new round of "price war", and the competition was extremely fierce. Under this background, Geely Automobile broke through the tight encirclement and ushered in a "good start". From January to February, the cumulative sales volume of Geely Automobile was 324,900 vehicles, up by over 55% year-on-year, among which the sales volume of new energy vehicles was 99,300 vehicles from January to February, up by 208% year-on-year.

"In 2024, the competition in China’s automobile industry will be more intense, and the knockout round will begin in an all-round way. The industry will enter the integration period and reshuffle. Geely Automobile adheres to the basic practice of internal strength and long-term, and insists on quality first and safety first for a long time. At the same time, it gives full play to the advantages of scale, systematic efficiency and innovation ability, improves product quality and achieves cost reduction and efficiency improvement. " Yan Jiayue, CEO of Geely Automobile Group, said.

The profound technical background and constantly evolving product strength have given Geely Automobile the confidence to continue to soar. In 2024, Geely Automobile set an annual sales target of 1.9 million vehicles, up about 13% year-on-year, of which 810,000 vehicles were new energy vehicles, up more than 66% compared with the total sales achieved in 2023, and the penetration rate of new energy increased from 29% in 2023 to 42.6% in 2024.

At the product level, Geely Automobile accelerated the iteration, launched a new round of product offensive, and continued to push the brand upward. In 2024, Geely brand will push three new energy products; The lectra brand will push three brand-new new energy products, and the first new energy medium-sized car, Lectra 07 EM-P, will be launched in May. Extreme brand will push three new energy products.

Shen Wanhongyuan said in the research report that in the complicated competitive environment, only the brand is the element that can be remembered and preserved by the market. Geely, Link, and even Krypton have all proved Geely’s brand operation ability. Shen Wanhongyuan is still optimistic about the high-quality independent brand enterprises that insist on operating brands, and believes that they will eventually occupy a bigger sky after the big waves.

(This article does not constitute any investment advice, and the information disclosure content shall be subject to the company announcement. Investors operate accordingly at their own risk. )