With EVs on the Rise, is Geely Stock Undervalued?

Under the watchful gaze of Li Shufu, the Chinese billionaire who purchased Volvo from Ford, Geely is absolutely killing it. The company has recently launched a new brand that leverages Volvo’s know-how with Chinese economies of scale called Lynk & Co., bought the storied sports car brand, Lotus, and seen its share prices double since the start of 2017. Despite that, Geely is still undervalued, according to the financial guys at Seeking Alpha.

Their biggest reason for believing Geely still has room for aggressive growth? It’s something we’ve talked about here at Gas 2 since day one: Climate Change.

“After several European countries such as France and the UK announced that they plan to completely ban new petrol and diesel cars by 2040,” writes David Krejca, “China quickly followed up … in a rapidly-rising billion people country like China, this is going to translate into a massive environmental relief and a long-term catalyst for the local EV industry.”

Geely-owned Volvo is already committed to offering some degree of electrification on every new model from 2019 on, with performance brand Polestar now focused on electric performance cars. The recent edition of Lotus- whose lightweight Elise serves as the basis for both the Tesla Roadster and the Detroit Electric SP-1– further emphasizes how well-positioned Geely’s automotive assets might be to capitalize on EV growth overseas.

The guys at Seeking Alpha go on, adding some insights into Geely’s “fundamentals” by adding that, “Between FY2013 and FY2016, revenue grew at a CAGR of 20 percent and diluted earnings per share expanded at a CAGR of approximately 21 percent. In the most recent trailing twelve months, these rates then accelerated to 78 percent and 126 percent respectively, as measured by Reuters‘ financial highlights. This represents the biggest profit growth in 8 years which does not look like a one-off event. For 2017, Geely sees its sales volume target at 1 million units, representing a gain of around 31 percent over 2016.”

What do you guys think? Will Volvo’s corporate masters keep the growth going and make all the money, or is it too late to catch up with Tesla and Nissan? Let us know what you think in the comments section at the bottom of the page.


Sources | Images: Seeking Alpha.

Jo Borrás

I've been in the auto industry 1997, and write for a number of blogs in the IM network. You can also find me on Twitter, at my Volvo fansite, out on two wheels, or chasing my kids around Oak Park, IL.