GWLLY - Geely Auto Has Hit Some Big Potholes But The Fundamental Story Is Intact

• Geely has been hit hard by production challenges, including component shortages, input cost inflation, and disruptions from COVID-19 lockdowns.
• Recent unit volume performance has been unimpressive, but new launches later in 2022 should drive a new period of market share growth, and exports continue to grow.
• Geely now has a clearer marketing message with four distinct brands, and the company is now aggressively targeting the mid-to-high-end of the market with a growing slate of hybrids/EVs.
• EBITDA margins will likely trough below 10% in FY'22 but then rebound on improving mix, improving volume leverage, and margin leverage from the move toward standardized architectures across models.
• Long-term revenue growth of 9% to 11% and high-single-digit FCF margins can drive significant long-term appreciation while sub-10% margin in '22 can still support a 50% higher share price in the near term.

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