Geely battered after sales disappoint

Business | Reuters and Avery Chen 9 Jan 2019

Shares of mainland carmaker Geely Automobile (0175) have plunged 25.07 percent in the past five trading days after posting disappointing sales figures, with investment houses lowering its ratings.

The stock price of the electric car giant closed yesterday at HK$10.22, down 11.28 percent.

Geely Automobile, the main listed unit of the Hangzhou-based Geely empire, which owns Volvo Cars and Proton, posted sales growth of 20 percent in 2018 to 1.5 million units, accounting for only 95 percent of its full-year sales volume target.

That was despite a slide in sales at a host of other car makers and forecasts that last year was the first in decades to see a fall in sales in China's overall car market.

Credit Suisse downgraded Geely's rating from "outperform" to "neutral," with the target price falling to HK$11 from HK$29, while Bank of America Merrill Lynch lowered the rating from "buy" to "underperform," and cut the target price from HK$19 to HK$10.

Geely said in a filing that its sales started to slow in the last quarter of 2018 - with a 44 percent drop in December alone - according to monthly sales data.

Chairman Li Shufu said that the year ahead was pivotal. "We must lay the foundation for our survival, otherwise we may soon face a period of demise," he said.

The gloomy forecast for 2019 highlights how the year is likely to be tough for all car makers, including General Motors and Great Wall Motors (2333).

Baoding-based Great Wall announced yesterday that its sales volume rose 6.54 percent year-on-year to 133,794 units last month, but fell 1.6 percent to 1.05 million units in 2018.

Its production volume jumped 14.14 percent year on year to 135,800 units in December, and grew 1.17 percent year on year to 1.04 million last year.

China's auto market likely contracted last year for the first time since at least 1990, the China Association of Automobile Manufacturers said last month, citing economic shifts, weakness in smaller cities, and "international reasons" - which could refer to the Sino-US trade war. The industry body expects about 28 million vehicle sales in 2019, roughly level with 2018.

Search Archive

Advanced Search
June 2019

Today's Standard

Yearly Magazine

Yearly Magazine