Geely: Per-car net profit on par with BYD; big comeback?
$GEELY AUTO(00175.HK) released its Q1 2026 results at Hong Kong midday on Apr. 29 (HKT). While headline revenue and NP attributable to shareholders missed, the core metrics of GPM and per-vehicle core OP rose against the cycle, underscoring strong operating resilience.
1. Revenue slightly below, but per-vehicle ASP held firm: Q1 revenue was RMB 83.8bn (+15% YoY), below the street’s RMB 92.3bn.
The market’s key worry was a QoQ decline in per-vehicle ASP. This concern came even as the mix of premium ZEEKR and exports increased this quarter.
In reality, the revenue miss did not reflect weakness in the core auto biz., but mainly softer components and external tech licensing (e.g., battery sales to Volvo). Actual selling ASP was flat vs. Q4 2025.
2. Per-vehicle ASP flat QoQ, up sharply YoY: Q1 selling ASP was RMB 112,000, up 18.3% YoY vs. RMB 94,000, driven by higher premium and export mix lifting unit prices.
Flat QoQ was mainly due to temporary promotions at Lynk & Co., offsetting the positive mix effects from premiumization and exports.
By brand:
a) ZEEKR ASP (up): rose from RMB 281,000 a year ago to RMB 295,000–300,000 in Q1, primarily on the breakout success of the high-end 9X (priced RMB 400,000–500,000, >10k units sold in Mar.).
b) Geely brand ASP (up): increased from RMB 85,000 to RMB 91,000, as faster NEV transition and the Galaxy M9 drove premium breakthroughs.
c) Lynk & Co ASP: down slightly YoY, as sales of the higher-priced Lynk & Co 900 eased QoQ and the brand offered discounts up to RMB 46,000 on models such as 01, 06, 07, and 08 EM-P.
3. GPM improved QoQ against the tide: Q1 group GPM was 17.5%, up 60bps QoQ and above the street’s 17%. Dolphin Research sees the drivers as follows:
a) Export mix surged: Q1 export volume reached 203k units (+130% YoY), with mix jumping from 13% to 29%. The higher-margin overseas portfolio was the main tailwind for GPM.
b) Premium scale-up: ZEEKR sold 77k units in Q1 (+34% YoY), with mix up 4ppts to 11%, and the higher-margin 9X provided strong support.
c) Withstood negative scale and cost pressure: domestic NEV purchase-tax roll-off drove a 17.7% YoY decline in China volumes to 506k units, with total volumes at 709k (-17% QoQ), creating negative scale effects.
Alongside higher lithium carbonate and copper/aluminum prices (per-vehicle cost impact ~RMB 2,000), GPM should have been under pressure. Robust cost-down execution (nearly 80% of Q1 target achieved, full completion expected in Q2) offset these headwinds.
Looking to Q2, ZEEKR 8X deliveries should push premiumization further, and Geely expects GPM to stay stable QoQ or edge up.
4. ‘One Geely’ integration shows early results with sharply lower opex: Before full volume leverage kicked in, Q1 R&D, selling and admin expenses totaled RMB 10.3bn, down 31% QoQ (vs. RMB 14.8bn), with the opex ratio down 170bps QoQ to 12.3%.
R&D: fell RMB 1.35bn QoQ to RMB 4.56bn, well below the street’s RMB 5.08bn. Notably, this came as the expensing ratio rose further to 44% (28.5% in Q1 2025; 36% for FY25), indicating total R&D outlays have begun to contract, key new programs likely wrapped up, and integration-led efficiency gains emerging.
Selling expense: roughly RMB 4.4bn in Q1, sharply lower QoQ (vs. RMB 6.7bn) and below the expected RMB 5.2bn, likely reflecting deliberate pullback in off-season marketing and synergy from organizational integration.
5. Per-vehicle core OP doubled, matching BYD: Supported by higher GPM from exports and premiumization, and opex cuts under ‘One Geely’, per-vehicle core OP jumped from RMB 3,300 in Q4 2025 to nearly RMB 6,000 in Q1 2026, broadly in line with BYD, which had a 46% overseas mix in Q1 2026.
Total core OP reached RMB 4.22bn, up 49% QoQ (+56% YoY), with OPM up 230bps QoQ to 5%.
6. NP attributable down YoY, mainly FX-related: Q1 NP attributable was RMB 4.17bn, down 26.6% YoY. This was largely non-core: last year’s large FX gains created a high base (financial expense up ~RMB 3.1bn YoY).
In addition, a higher R&D expensing ratio reduced reported profit (NP would have exceeded RMB 5.0bn if the Q1 2025 expensing ratio were maintained). Overall, accounting is more conservative and core earnings quality remains solid.
Dolphin Research view:
At first glance, Geely’s Q1 print seems below expectations, with pressure on revenue and earnings. But this mainly reflects declines in non-vehicle revenues, a high FX gain base last year, and a proactive rise in R&D expensing, all of which are non-operating.
Look through the noise and the core auto franchise is improving. With twin engines of premiumization and exports, Geely held per-vehicle ASP in a tough market and lifted GPM meaningfully.
Meanwhile, ‘One Geely’ has begun to deliver sizable synergies and cost savings on the expense line. These benefits are starting to be unlocked.
On profit release, per-vehicle core OP surged from RMB 3,300 in Q4 to nearly RMB 6,000 in Q1. Notably, despite a lower export mix than BYD (29% vs. 46%), per-vehicle profit was comparable.
Core OP jumped 49% QoQ and OPM rose 230bps to 5%, signaling a tangible upgrade in the earnings structure and a shift toward higher-quality, self-sustaining growth.
On the most critical NEV transition: In Q1, despite the roll-off of NEV purchase-tax incentives and a 5% YoY decline for the industry, Geely’s NEV sales rose 9% YoY to 369k units.
NEV penetration reached 52%, up 4ppts YoY, and domestic NEV share climbed from 10.5% in Q4 2025 to 13.4%. The faster transition marks 2026 as a year where growth is primarily NEV-driven.
By brand breakdown:
a) Galaxy series: Q1 NEV sales were 114k units, down 9.5% YoY, mainly due to tax incentive roll-off weighing on mid-to-lower-end models. The mix is being upgraded, with Starship 7, E5, and A7 taking the lead, and the Galaxy M9 catalyzing a high-end push.
b) Lynk & Co: NEV sales rose 33.8% YoY to 51k units, with NEVs at 62% of brand sales (+10ppts YoY), driven by strong Lynk & Co 900 and 08.
c) ZEEKR: NEV sales rose 85.8% YoY to 77k units, led by hot-selling 7X and 9X. The brand’s premium tilt, especially the 9X, is lifting ASP and vehicle GP.
Geely’s Q1 NEV sales reached 369k units, up 9% YoY despite the seasonal soft patch for ICE, implying 16.6% progress toward the 2026 full-year target of 2.22mn units.
Looking to Q2, commodity inflation in lithium carbonate, copper, and aluminum could add ~RMB 2,000 per vehicle. However, ZEEKR 8X deliveries should release further premium momentum and help offset costs. Management expects GPM to stay stable QoQ, with a chance of a modest uptick.
2026 outlook:
Geely is set for a potential ‘Davis double play’, delivering alpha: premiumization and exports should continue to fatten profits (lifting EPS), while an accelerated NEV shift should raise the valuation ceiling (higher PE).
1) Profit engine I: sustained product upcycle, premiumization drives ASP up
The company targets 3.45mn units in 2026 (+14% YoY), with growth led by NEVs and overseas.
NEV sales target is 2.22mn (+32% YoY), with NEV penetration up another 8.5ppts to 64%, while ICE is targeted at 1.23mn (-8% YoY).
By brand plan, nearly 10 new models will launch in 2026 to support the volume goal:
Geely Galaxy (scale backbone): NEV target 1.52mn (+23% YoY), anchored by new models such as M7 and Star 耀 7 to defend the mainstream.
ZEEKR (premium profit driver): target 300k (+34% YoY), with incremental volume from 8X (launched in Apr.) ramping and 9X scaling. With presales for 8X breaking 10k in 38 minutes and sharing the leading architecture with 9X, it can be a hit in the luxury 5-seat SUV segment, teaming with 9X to lift ASP and margins and release meaningful profit elasticity.
Lynk & Co: target 400k (+14% YoY), driven by rapid NEV transition (penetration >60%) and new models such as Lynk & Co 800.
2) Profit engine II: overseas breakout adds the highest profit elasticity
Overseas is the most certain growth and profit lever for 2026. The export target was lifted to 750k (+79% YoY).
With 203k exports already in Q1 (+129% YoY), the annualized run-rate exceeds 800k, making an upside beat likely. Overseas carries higher profitability: in 2025, export ASP (RMB 176,500) was 1.7x domestic, GPM roughly 10ppts higher, and per-vehicle NP near RMB 10,000.
As channels expand (aiming to surpass 2,200 outlets) and NEV export mix rises (Proj. 45–50%), overseas will be the main driver of profit pool expansion.
3) Cost-efficiency cornerstone: ‘One Geely’ unlocks systemic dividends
Following ZEEKR’s privatization at end-2025, ‘One Geely’ enters full execution. Deep integration across R&D, procurement, manufacturing, and management should materially dilute operating costs.
Q1 already showed early traction, and the R&D, selling, and admin expense ratios should trend lower through 2026, underpinning profit release.
Accelerating NEV transition to lift the PE anchor:
On stronger fundamentals from faster ‘exports + premiumization’, Dolphin Research expects total 2026 sales to approach 3.5mn (exports 750k, +79% YoY; domestic 2.75mn, +5% YoY). With a richer mix and efficiency gains, per-vehicle core NP is projected to rise ~13% YoY to RMB 6,300–6,600.
That implies 2026 NP of RMB 21.7–23.1bn (+29% to +37% YoY). As NEV penetration breaks 60% and dominates the narrative, legacy OEM discount should fade and a NEV premium multiple is warranted.
Dolphin Research assigns a 12–13x 2026E PE (vs. prior 10x), implying a fair value of RMB 260.4–300.0bn, or 23%–41% upside vs. the current mkt. cap.
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