Citi has released a research report stating it reaffirms a "Buy" rating on Geely Auto (00175) and maintains a price target of 30 HKD.

The bank noted that Geely has signed an agreement with Ford to acquire a 34% stake in the idle Body3 plant in Valencia, Spain, for a total consideration of 221 million euros. The plant has an annual design capacity of 400,000 vehicles. Its net profit for fiscal year 2025 was 70 million euros, compared to 236 million euros in fiscal year 2024. If Geely ultimately secures an annual production capacity quota of 150,000 vehicles, the estimated cost would be equivalent to only 10% to 20% of building a new greenfield factory. The transaction is expected to be completed in the fourth quarter of 2026 and will help Geely enter the European car production market through a Completely Knocked Down (CKD) model. The market is expected to react positively.

Citi pointed out that this agreement is a milestone breakthrough for Geely's long-term expansion strategy in Europe. Furthermore, Geely can directly leverage Ford's existing manufacturing infrastructure and local supply chain network, shortening its overseas deployment cycle. It can also monetize its EV technology through licensing and original equipment manufacturing (OEM) income.