[ET Net News Agency, 12 February 2020] Daiwa Research lowered its target price for
Geely Automobile (00175) to HK$17 from HK$19 and maintained its "buy" rating.
The research house said Geely's potential merger with Volvo Car was an attractive deal
for Geely given Volvo Car's profitable business. Daiwa estimated that acquiring Volvo Cars
at a 1.5x PBR (versus global OEMs' average PBR of 0.8x) and 11x PER, the deal will likely
result in 2.7%-34% EPS upside potential for Geely.
It also expects long-term synergies to be realised from the combined entity through
cost/facility sharing and technology development cooperation. But Daiwa revised down its
2020-21 EPS forecasts by 9-13% for Geely due to the novel coronavirus outbreak. (KL)