Geely Auto (Trans): Net profit ~RMB 10bn; leadership change targets 920k exports

Dolphin Research's transcript of Geely Auto's FY26 interim earnings call is summarized below. For the earnings read-through, see ‘Geely: Overseas Surge—On Track to Replicate the Next BYD?’

Key takeaways: 1H attributable net profit was nearly RMB 10 bn with a ~5.6% net margin, far above the industry avg. of ~1.6%. Q2 GPM reached 18.4%, and guidance points to at least Q2 levels in Q3. However, Galaxy/Lynk & Co./China Star volumes each fell 5%–6%. The mainstream price bands still lack a breakout model. Meanwhile, Eric Li stepped down as chairman with An Conghui succeeding him, and the full-year export target was raised from 640k units to 920k.

I. Earnings highlights recap

1. Profit and scale hit record highs

a. Attributable net profit neared RMB 10 bn, implying a ~5.6% net margin. The auto sector’s avg. profit margin in 1H was only ~1.6%, with many OEMs loss-making. b. Revenue grew faster than volume, and profit grew faster than revenue. Volume, revenue, profit, operating efficiency, and cash reserves all reached record highs.

2. GPM and two key drivers

a. Total: 1H GPM was 17.9% vs. 16.2% a year ago (+170 bps). Q2 was 18.4% vs. Q1’s 17.5%. b. Driver 1, premiumization: ZEEKR sold 77k units in Q1 and 100k in Q2, adding ~23k QoQ. ZEEKR’s GPM is ~20%. c. Driver 2, globalization: exports were just over 200k units in Q1 and ~270k in Q2. Export GPM is roughly 1,000 bps higher than domestic sales.

3. Q3 GPM guide and cost hedges

a. Management expects Q3 GPM to be no lower than Q2’s 18.4%, driven mainly by further export ramp-up. b. To offset commodity and chip inflation: pulled forward bulk inventory build to end-2025, locked full-year prices and volumes with suppliers in Q2, and put on hedges in futures markets to cushion Q3–Q4 volatility.

4. OpEx ratio and resource efficiency

a. G&A ratio fell from 1.9% to 1.7% (-20 bps). b. R&D ratio decreased from 5.5% to 5.2%. Sales spend remains aggressive onshore, with stable investment offshore. c. Planned model count cut by 20%, removing overlapping models across brands from the product pipeline.

5. Accounts payable and days

a. Under HKFRS, A/P was ~RMB 81 bn at end-2025 and ~RMB 84 bn as of Jun 30, 2026, up only ~RMB 3 bn. The market’s view of a YoY doubling is incorrect. b. A/P days: ~115 days in 1H25, ~103 days in 1H26, with Q2 further down to ~96 days. It is expected to shorten through Q3–Q4. c. Payment terms: legacy 45/60/90-day terms were compressed to within 60 days. SMEs were shortened to ~30 days or even on-site settlement.

II. Earnings call details

2.1 Management remarks

1. 1H operating stance and industry backdrop

a. Volume, profitability, operating efficiency, and cash reserves all hit record highs. CAAM data shows Geely ranked No.1 in China’s end-market sales in 1H. b. The industry backdrop is the toughest in ~20 years: double-digit decline in China auto sales, rapid chip and raw material inflation, and fierce competition. c. Despite record revenue and margins, the growth path inevitably faced sector headwinds. d. Management characterizes results as in-line with expectations, strong but unsurprising, and sustainable. The durability stems from system capability, strategic resilience, and long-term value creation. e. ‘System capability’ means results did not rely on a single model, segment, or time window. It reflects the combined effect of full-stack AI, safety leadership, business integration, and diversified power/energy, with the standout being tangible progress in intelligent transformation.

2. Leadership and governance changes

a. Eric Li resigned as chairman of Geely Auto and was succeeded by An Conghui. An is CEO of Zhejiang Geely Holding; 0175 is the only listed entity within Geely where he serves as chairman. b. Gui Shengyue resigned as CEO and was succeeded by Gan Jiayue. Gui remains an executive director and vice chairman, based in Hong Kong, focusing on HK and capital markets. c. Li Donghui stepped down from current roles and now serves as vice chairman of Geely Holding, mainly overseeing Intl markets. He remains an executive director of 0175 and continues to be deeply involved in operations. d. Positioning: this is not a mere personnel reshuffle. It signals a shift from family-driven to institution-, system-, and team-based governance, with more transparency, professionalism, and scientific management. It also signals that the ceiling for professional managers has been lifted internally. e. The three-tier governance structure will continue to operate transparently and effectively. The company will uphold shared pressure and responsibility, co-creation of value, and shared results, promoting top performers.

3. One Geely and resource integration

a. Building on the 2024 Taizhou Declaration, inject scale-ready, strategically valuable businesses into the listed platform. Pause non-value-adding businesses and fold useful units into 0175. b. Optimize the biz. mix and resource allocation, strengthen system synergies, and reduce internal friction and duplication. c. Actions to date: integrated procurement and R&D, built shared back- and middle-office platforms, and set up a unified Geely sales company in 1H. d. Stance: firmly against price wars and involution, competing instead on quality, technology, brand, service, and corporate integrity.

4. China market and brand/product matrix

a. Premiumization path: ZEEKR, Lynk & Co., Geely Galaxy, and China Star are all moving upmarket, using flagship, high-value products to unlock growth. b. 2H launches: ZEEKR 009 Glory and 9X Glory; Lynk & Co. Z20 and all-new 900; Galaxy Warship 700 off-roader and TT BEV. c. China Star will fully pivot to i-HEV. Multiple i-HEV models will launch in 2H, alongside Xingrui L Plus and a new flagship SUV, reinforcing No.1 position in ICE and hybrid among Chinese brands. d. Single-model positioning: Xingrui ranks No.1 among A-class ICE sedans of Chinese brands. Bin Yue ranks No.1 across all brands in China’s A0-class ICE and hybrid SUVs. e. ZEEKR holds ~one-third share in China’s >RMB 500k segment and targets a similar share in global premium markets. Its brand power builds on Volvo and Lotus heritage in safety and lightweighting, combined with Geely’s decades of investment, giving ZEEKR a one-generation edge vs. peers.

5. Overseas markets: targets and product upgrade

a. Full-year export target raised from 640k to 920k units, with a 1 mn challenge; long term, ~two-thirds of sales to come from overseas. 1H overseas sales hit a new high, +~158% YoY, already exceeding the initial full-year target. b. Near-term regional plan: build one 300k-unit market in ASEAN; three 200k-unit markets across Pan-Europe, Eastern Europe, Latin America & Africa; and one 100k-unit market in the Middle East & Asia-Pacific. c. Product upgrade: current export lineup is limited in models and price bands. Next, expand breadth and push premium products globally. Demand for Geely’s premium brands is rising in the Middle East and Europe. d. Brand implication: China NEV acceptance abroad was once concentrated in the low end. ZEEKR aims to prove Chinese OEMs can make premium luxury NEVs. The i-HEV category is the world’s largest by share, and Geely’s i-HEV is globally competitive. e. Export advantages: premiumization, a diverse model portfolio, and two decades of trust built via Volvo integration and collaborations with partners like Renault.

6. Overseas capacity and partnership model

a. Core dilemma: overseas is the biggest growth engine for Chinese OEMs, yet geopolitics are volatile. Expansion must come with limited offshore capex exposure—an industry-wide challenge. b. Solution: no new greenfield capacity. Share platforms and capacity with global peers, leveraging local labor, supply chains, channels, and service networks for high-quality, fast, and low-risk localization. c. Projects: Proton is likely to exceed 200k units this year, targeting a 500k-base in SE Asia. The Ford JV plant in Spain has ~500k/year capacity, with Geely-branded models to start in 2028. The Renault JV plant in Brazil is ~300k/year, and capacity in Korea will continue to ramp. d. Volvo’s overseas plants will produce high-end models for Geely brands. Its Europe plant will start in 2028, making premium models within the Geely system. Localization capacity is taking shape and will bear fruit over the next few years.

7. Tech stack: full-stack AI, ADAS, and propulsion

a. Full-stack AI is core, centered on AI cloud power, i-HEV intelligent hybrids, smart e-drive with 900V ecosystem, AI digital chassis, quantum-grade AI E/E and chips, integrated sky-ground connectivity, and embodied intelligence. b. Propulsion and efficiency: the i-HEV launched in 1H delivers fuel economy ~12% better than global benchmarks. The new 16-in-1 smart e-drive leads the industry in overall efficiency, further cutting NEV energy use. c. ADAS: G-ASD 5.0 enters mass production in 2H, and G-ASD H7 will roll out to more Lynk & Co. and Galaxy models. Geely is the first Chinese OEM certified under the national ADAS safety management system, and G-ASD is the first China-origin system certified by the UN for ADAS. d. Cockpit and mobility: Super EVA will realize cockpit-driving integration and full-stack AI via OTA. Robotaxi scale operations will also accelerate. e. Long-term value: Geely was among the first to call for full-stack AI in autos. The Xingrui AI compute center was the first step, and the ecosystem now spans ECARX, G-ASD, and Caocao Mobility.

8. Batteries, core components, and ecosystem assets

a. Jinzheng Battery: capacity reached 70–80 GWh over the past decade, ~200 GWh next year, and ~300 GWh by 2028. b. Tech roadmap: breakthroughs are expected in solid-state, sodium-ion, large-scale energy storage, and fuel cells. c. E-drive capacity and technology are world-class and will further empower the group. d. Hangzhou Jidian: leveraging a decade of E/E component R&D, it is building a NEV core component base in Hangzhou. Lines are reserved for core AD tech, and domain/zone control technologies are in place. e. These are candidate assets to inject into the listed company as scale-ready, strategic businesses.

9. 2H focus and 2030 strategy

a. Three pillars: China market, overseas expansion, and AI transformation, laying the groundwork for the 2030 strategy. b. Use AI to solve battery safety and degradation, and back-inject full-stack AI into legacy propulsion technologies. c. A dedicated event will be held at year-end to elaborate on the 2030 strategy.

2.2 Q&A

Q: ZEEKR 9X has started exports and pre-sales in Australia, the Middle East, and Malaysia. How is the feedback? What are steady-state sales expectations for 8X/9X across overseas and China?

A: Overseas mirrors China’s industry. 1H export avg. growth was ~72%, while Geely rose ~158%. Exports exceeded 420k units in 1H, with NEV exports up 585% YoY. Geely leads among mainstream Chinese OEMs in growth, NEV export growth, and premium brand exports. Regional performance is balanced but divergent: Latin America +~298% YoY, Europe +~280%, ASEAN >+120%, and Eastern Europe/Central Asia +~100%. Near-term, the goal is one 300k market, three 200k markets, and one 100k market.

Mid-to-long term follows a 1-2-3-4-5-6 Intl strategy: ‘1’ means one unified overseas operating system with shared back- and middle-office, positioned as ZEEKR for high tech, Lynk & Co. for sporty DNA, and Geely for the mass market. ‘2–6’ target Central Asia 200k, Eastern Europe 300k, Middle East 400k, ASEAN 500k, and Europe 600k, totaling 2 mn units. Long term, ~two-thirds of sales will come from overseas. For premium exports, 8X and 9X have passed certifications and early feedback is positive, with some channels charging premiums, suggesting strong demand. Overseas GPM rose over 200% YoY. The current export focus is ZEEKR 7X and 007; next, 8X/9X/009 will scale, with 8X accelerating from Q3 and rolling out in Latin America and Europe from Q4. 009 and 009 Glory will launch Europe editions in 2H. No specific 8X/9X volume guide was provided.

Q: China Star is growing fast. How do you view the future of ICE in China, and will it shift to PHEV or i-HEV?

A: China sold ~8.29 mn ICE vehicles in 1H26, -~24.3% YoY, with pure ICE down 31.9%, confirming migration to NEV. Globally, ICE volumes remain large: ~80 mn units worldwide, ~20 mn in China, ~15–20 mn in the U.S., and ~40 mn elsewhere. Global NEV penetration is only slightly above 10%, leaving substantial room for ICE. China Star volumes fell ~5.7% YoY in 1H, much smaller than the industry decline, lifting share from 8.7% to ~10.4%. This reflects tech route and product structure. ICE will go two ways: more HEV and stronger ADAS. The latest i-HEV launched on Apr 13 is a ground-up intelligent platform, not a retrofitted ICE with a battery and torque boost.

It pairs ~60C high-rate, high-capacity batteries with ~230 kW e-drive and ~48.41% thermal efficiency. Gains in economy, performance, safety, and reliability are step-changes, with 0–100 km/h about 1s faster than Japanese peers. This comes from reworking the underlying architecture to sense humidity, temperature, and altitude, keeping engine and motor in high-efficiency zones. High-performance batteries and efficient e-drive jointly improve key metrics, surpassing many Japanese and other models. On products, no new traditional ICE models will be developed; all ICE will pivot to i-HEV. In 2H, new Xingrui L Plus and Boyue L i-HEVs will launch, and the full i-HEV lineup will go global.

Q: Eric Li noted no new capacity builds, with shared capacity as a core Intl model. What are Geely Holding’s advantages and challenges in coordinating this?

A: Excess capacity is global, not just in China. With two-thirds of revenue targeted from Intl markets, localization must deliver high quality, speed, and low risk. Leverage existing advantages in Europe and partner outside the Geely system to use their capacity, local talent, supply chains, and similar channel/service networks. Risk control is paramount. Over the past year, effort focused on aligning Geely Holding and Geely Auto to support each other and build competitive synergies. This Intl path differs meaningfully from peers.

Q: What drove the 1H GPM increase? With energy storage systems and memory chips rising, can Q3 sustain margins?

A: 1H GPM was 17.9% vs. 16.2% (+170 bps). Sector avg. net margin was ~1.5% vs. ~5.4% for the company. Q2 GPM was 18.4% vs. 17.5% in Q1. Two drivers: premiumization, with ZEEKR volumes up ~23k QoQ and GPM ~20%, and globalization, with Q1 exports just over 200k units and Q2 ~270k. Export GPM is ~1,000 bps higher than domestic. As for commodity and chip inflation in Q3: Geely pre-built inventory by end-2025, locked full-year prices/volumes with suppliers in Q2, and hedged in futures. With exports set to rise further in Q3, management expects GPM to be at least on par with Q2.

Q: Outlook for BEVs, and Geely’s BEV strategy? BEV share had been under pressure, but China BEVs have been expanding since Apr.

A: In 1H, ICE fell ~30% and hybrids ~28% in China, yet BEV volumes still grew, underscoring strong demand. Four features drive BEVs: high voltage, ultra-fast charging, large battery capacity, and high intelligence. New-generation programs take time. This year, high-voltage models will roll out: high-voltage ZEEKR and Lynk & Co. models and the pure-electric Galaxy TT. Galaxy TT debuted on Jul 21 with 990 initial reservations, now at ~22k. High-voltage tech alleviates range anxiety to a degree. Galaxy TT will launch in 2H, followed by more high-voltage products. Lynk & Co. Z20, a BEV, will launch soon, and ZEEKR 001 and 009 Glory will also come as BEVs. Both BEV and hybrid pipelines will see clustered launches in 2H.

Q: In the Spain project with Ford, will Ford adopt Geely’s NEV tech?

A: The foundation is Geely Galaxy’s GEA architecture, a base structure upon which brand-specific products are developed. Risk control comes first. While Geely is seen as asset-light, risks must be managed and all parties must win by sharing capacity and supply chains and localizing production. Second, products made in Europe are for Europe only and will not be sold into the U.S. or elsewhere. EU competition rules set requirements for market participants, so Geely will adopt new approaches to local supply chain integration: accelerating new structures and building scale to lower cost. Globally, the strategy is shared capacity to maximize system leverage economically, with resources concentrated on Intl expansion and two-thirds of sales offshore under the 1-2-3-4-5-6 plan. Execution hinges on deeper localization: products go global, supply chains localize, and brand/tech keep moving up. After-sales is equally critical globally and is the dividing line for becoming a true global flagship.

Q: Why did A/P reportedly double YoY in the financials, and any full-year outlook?

A: That needs correction: under HKFRS, A/P was ~RMB 81 bn at end-2025 and ~RMB 84 bn on Jun 30, 2026, up ~RMB 3 bn, not doubling. After anti-involution policies, the company accelerated payments. Legacy 45/60/90-day terms have been compressed within 60 days, and SMEs to ~30 days or on-site payment. A/P days improved from ~115 in 1H25 to ~103 in 1H26 and ~96 in Q2. With more policies taking effect, days should shorten in Q3–Q4. No full-year guidance was provided.

Q: Progress on grid distribution, charging infrastructure and replenishment, and energy storage/efficiency?

A: BEV scale-up relies heavily on ultra-fast charging. User experience hinges on convenience, immediacy, and discharge efficiency, which in turn depends on network coverage. Two real issues: high temperatures damage batteries—above ~45–50°C, every +10°C roughly doubles degradation, potentially halving ~10-year life to ~5 years. Ultra-fast charging has its own long-term risks, akin to smoking: not obvious short term, but harmful over time, so R&D must deliver fast yet safe charging.

Over 4–5 years, Geely built an end-to-end fast-charging capability via AI. In 2021, it founded Haohan Energy and launched ~360 kW ultra-fast chargers in China, cutting charge time from hours to minutes and then from 30 min to ~11.5 min. In Apr 2025, it introduced 1,500 kW-class mass-produced megawatt equipment with ~1,230 kW actual power, charging 10% to 70% in ~4m22s and to full in just over 8 min. It subsequently developed thermal management, AI, and smart charging core tech. The 5th-gen chargers, built on AI foundation models and ultra-megawatt tech, will be unveiled by end-Q3 this year. Key points: intelligent thermal control to avoid end-to-end overheating and cap temps within the 65°C national certification limit; AI thermal control with vehicle-pile-cloud multi-point sensing and millisecond detection to integrate monitoring, maintenance, and charging; and giving users more control over charge time and safety.

Q: One Geely has reshaped the back office—will the front end also change? There are many models but few memorable ones, and overlaps exist among 9X, Lynk & Co., ZEEKR, and Galaxy. How will sub-brand positioning be differentiated, and will product lines be streamlined?

A: By the numbers: in 1H, Galaxy volumes fell 5%, Lynk & Co. 6%, and China Star 5%, while ZEEKR rose 97%. Overall revenue rose 1% vs. industry avg. of -6%. Since the 2024 Taizhou Declaration, Geely returned to One Geely, integrating resources to build large back- and middle-office platforms, cut duplication, streamline org and functions, and remove redundancies. Procurement and R&D were integrated, and a unified Geely sales company was established in 1H. Results are visible: G&A fell from 1.9% to 1.7%, sales spend remained heavy onshore and stable offshore, and R&D fell from 5.5% to 5.2%. From last year to this year, overlapping models across ZEEKR/Lynk & Co./Galaxy/China Star were eliminated from plans, reducing model count by 20%.

Brand positioning is clear: Galaxy targets premium mass-market products; Lynk & Co. focuses on trendy, sporty designs while broadening its lineup; and ZEEKR is a premium tech brand. 2H is a key window with multiple launches. Galaxy TT and Warship 700 will carry new tech and have earned strong market recognition, likely staying hot. Lynk & Co. Z20 is poised to be a hit.

Additional view: this goes to the core. Geely currently lacks breakout models. Product plans were set years ago and are now under review, which takes time. 1H GPM, ASP, and profitability were solid, but we are proactively diagnosing issues: headline numbers were driven mainly by ZEEKR, then Galaxy. Brand power in mainstream price bands is still lacking, with few strong mid-range models. We will improve product/model and tech roadmaps; once a strong mid-range hit emerges, GPM and per-unit profit should rise meaningfully.

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