CMSC International has released a research report maintaining its HK$36 target price and "Buy" rating for GEELY AUTO (00175). The report indicates that the company's first-quarter performance met expectations, with a net profit attributable to shareholders of RMB 4.17 billion. After excluding foreign exchange impacts, core profit reached RMB 4.56 billion, representing a 31% year-on-year increase, which aligned with forecasts.

First-quarter sales volume reached 710,000 units, a 1% rise compared to the same period last year. Revenue grew by 15%, outpacing the sales volume growth due to strong export performance and an increased proportion of high-end vehicle sales. Profit growth exceeded revenue growth, reflecting improved operational efficiency and enhanced profitability.

The gross profit margin saw a significant improvement, effectively offsetting challenges such as rising raw material costs and intensified competition in the lower-end vehicle segment. Contrary to market trends, the margin increased by 1.8 and 0.6 percentage points year-on-year to 17.5%.

The report also highlighted that Geely's market share for fuel-powered vehicles increased by 0.3 percentage points to 10.7%, while its new energy vehicle market share rose by 1.7 percentage points to 13.4%. Exports surged by 126% year-on-year to 203,000 units, with new energy vehicles accounting for 125,000 units, a 572% increase from the previous year.

The company's premiumization strategy showed strong momentum, with its brand Zeekr recording an 85% year-on-year growth in the first quarter. Models such as the Zeekr 9X and 8X experienced robust sales. Management guidance suggests that the second-quarter gross margin will remain stable or see a slight increase, supported by cost optimization and an improved product mix. Achieving an annual export sales target of 750,000 units is considered feasible, as many regions are currently experiencing stock shortages and order backlogs.