Nomura: Maintain Geely's "Buy" rating to a target price of HK$23.9

Nomura said that Geely Automobile's (0175.HK) supply chain tensions are expected to improve, and described its 2022 sales target as aggressive, giving a target price of HK$23.9 but maintaining a "buy" rating. The report pointed out that although the supply chain bottle neck problem still poses production challenges for Geely Automobile in the short term, Geely's sales volume rose by 17% month-on-month last month, reflecting the gradual improvement in production, and management set a sales target of 1.65 million units this year, or 24% year-on-year growth, 3.7% higher than Nomura's expected 1.59 million units.

Nomura believes that geely's rebound in production this year is crucial to alleviate the ongoing pressure on raw material costs, while product portfolio optimization will also help alleviate the pressure on margins, with average selling prices estimated to rise by 13% this year, up 10% from previous estimates.