Morgan Stanley: Geely Automobile bets on higher sales and margins in the fourth quarter as lower export tax rebates test overseas profits

What will drive the fourth-quarter profit improvement?

Geely management expects sales in the fourth quarter of 2026 to exceed 900 thousand vehicles, including more than 300 thousand in October, with sales continuing to grow month on month in November and December.
Management believes higher sales, lower lithium carbonate prices, stable copper and aluminum prices, and an improved product mix will together lift the fourth-quarter gross margin quarter on quarter, supporting profit of 6 billion yuan.
Morgan Stanley notes that slowing domestic auto demand or intensifying price competition, and widening losses in the new-energy business, could affect the improvement in profitability.

Facing lower export VAT rebates, Geely does not currently plan to immediately raise prices for existing Galaxy models. Instead, it plans to adjust pricing for new models exported next year to protect margins.
The company also sees localized production as a competitive advantage and has a medium-term target of overseas production capacity exceeding 2.2 million vehicles. Morgan Stanley also warns that overseas competition and protectionism could slow sales.

Geely plans to increase the number of charging connectors from about 12 thousand currently to more than 100 thousand by the end of 2027, to strengthen product competitiveness and market share. Initially, it will prioritize rapid expansion using its own funds.
Its longer-term target for 2030 is 150 thousand charging stations and 600 thousand charging connectors, including 100 thousand smart charging stations. The company’s battery asset business became profitable in the first half of 2026.
Morgan Stanley rates Geely Automobile Overweight, with a target price of HK$27.