175 — Geely Automobile Holdings Limited

Deep-value analysis — 0175.HK · Geely Automobile Holdings Limited

Analysis date: 28 August 2026 · Reference price: HKD … · Market cap: HKD 195.2 bn = CNY 167.1 bn (FX 0.8559 CNY/HKD, cross-checked via USDCNY 6.7205 / USDHKD 7.8389 → 0.8573) Reporting currency: CNY · Trading currency: HKD · Exchange: HKEX (NOT an American homonym — 0175 has no SEC CIK, EDGAR skipped intentionally) Primary sources: H1 2026 interim report (HKEX, 17.08.2026), FY2025 results announcement (18.03.2026), 2025 Annual Report (April 2026), H1 2025 interim report (14.08.2025). All figures below are from filings, not the press, unless otherwise stated.

Executive summary

The thesis. Geely is China’s second-largest automaker by volume and the first by speed of repositioning: in 18 months it went from a conglomerate of brands partly listed separately (ZEEKR on the NYSE, LYNK & CO in a JV with Volvo) to a single consolidated entity under “One Geely”, and from a marginal exporter to China’s fastest-growing exporter (474,228 units in H1 2026, … y/y, source: H1 2026 MD&A, p. 51). The market pays 9.8x TTM core profit and 0.45x sales for this, with CNY 45-57 bn of net cash on the balance sheet. The problem isn’t that the business is bad — it’s that the free cash flow the value thesis rests on is overwhelmingly working capital, not profit, and that engine has just stopped.

The central figure, and why it differs from everything published. The TTM FCF reported by aggregators for Geely is ~CNY 47.3 bn, i.e. a 28% yield on market cap (stockanalysis.com gives CFO 52,107 and capex −4,760 mn CNY). That figure is wrong by construction: it counts as capex only purchases of property, plant and equipment (CNY 4.13 bn in FY2025) and ignores the CNY 13.79 bn of capitalized development costs that go into intangible assets. You can’t do that: the amortization of those same costs (CNY 9.74 bn in FY2025, note 9(c) of the Annual Report) is added back into CFO as depreciation/amortization. If you add back the amortization and don’t subtract the investment, you count the money twice. Geely itself defines capex as “property, plant and equipment + capitalized product development costs + prepaid land costs” = CNY 17.9 bn in 2025 and CNY 7.9 bn in H1 2026, with a CNY 16 bn budget for 2026 (FY2025 MD&A, p. 61; H1 2026 MD&A, p. 52). The company’s definition is the correct one. The real yield is not 28%.

The second, more important correction. Even with the correct capex, the reported TTM FCFE is CNY 32.1 bn — but CNY 21.8 bn of it comes from the change in working capital, not from operations. Cleaned of working capital, the TTM flow to shareholders is CNY … bn. The difference isn’t an accounting subtlety: in FY2025 working capital contributed +CNY 18.3 bn, in H2 2025 +18.9 bn, and in H1 2026 only +2.9 bn, with customer advances falling by CNY 7.7 bn (from 36.3 to 28.6 bn). The engine stopped exactly when volumes stopped growing (… y/y in H1 2026).

Estimated value. Normalized owner earnings CNY … bn (… bn cleaned of working capital + ~2 bn of sustainable structural contribution from the negative-working-capital model), capex at the company’s budget of 16 bn, r = 11%, g1 = 6%, gt = 2.5%, net cash CNY 45 bn. This yields an intrinsic value of ~HKD 24.0/share. Triangulating five models gives a range from … (bear, no growth, r 12%) to … (bull, with the working-capital tailwind sustained), with a median at …. Monte Carlo over 20,000 scenarios: median …, P10 …, P90 …, probability of undervaluation …%.

Verdict. Moderately undervalued, small position, NOT high conviction. The distribution is clearly skewed right (…% of scenarios positive) but the width is enormous (… to … between deciles), and that width comes from a single unknown: how much of the CNY 32 bn cash flow is recurring. The two models that don’t depend at all on the growth assumption — EPV Greenwald (…) and historical multiples at 11x (…) — say that at HKD … the stock is near fair value, not cheap. The value premium comes exclusively from growth, and volume growth in China is already negative. This is not a “pick it up off the floor” purchase; it’s a 1… position with monitoring on the Q3 2026 report, where the key signal is customer advances and the net trade-notes position.