Geely roars past its sales growth target

South China Morning Post - Sales at mainland carmaker Geely Automobile in the first four months of this year are already well ahead of its target growth rate, the company said, and it predicted a strong second half as long as the government did not further limit new car sales.

Geely said at its annual meeting yesterday that sales growth was 21 per cent, taking it to 187,377 units in the four months to April 30, against a target rate of 16 per cent for the whole year.

Lawrence Ang, Geely's executive director, said sales should grow even faster during the second half, when the group is due to launch four to five new models, including a brand new electric vehicle, the EC7.

"Our prospects are looking good this year as long as the [government] policy to cap the number of new car registrations isn't extended to second and third-tier cities," Ang said. "We were bracing ourselves earlier this year, expecting a cap to be imposed on Jiangsu province, but there's been no news so far."

The cap, aimed at easing traffic jams and air pollution in major cities such as Beijing, Shanghai, Guangzhou and Guiyang, has hurt car sales.

As a result, Geely, one of China's biggest vehicle exporters, was keen to speed up overseas expansion. Ang said the company's car exports could jump another 30 to 50 per cent this year, after 164 per cent growth last year.

Geely has set up production plants with local partners in Russia, Ukraine, Indonesia and Egypt in the past two years to speed up product delivery and reduce costs for consumers. It is due to build more vehicles in Uruguay, Ethiopia and Brazil, as cars exported from these countries would enjoy duty exemptions to key markets in Latin America and Eastern Europe.

But Ang said the company had no plans to open factories in Southeast Asia markets such as Myanmar, which was still largely underdeveloped.

Geely topped domestic rivals in overseas markets by exporting more than 100,000 vehicles last year. Great Wall was a close second at 95,489 vehicles. Both have been put among China's most promising vehicle brands by car critics and publications.

However, Geely is struggling to meet demand, and Ang said the production capacity of the company's plant in Changdu can no longer satisfy monthly sales of 5,000 sport utility vehicles. He said the plant's annual capacity will be boosted to 100,000 cars this year, from the current level of 60,000 cars.

The group's net profit jumped 32 per cent last year to 2.04 billion yuan (HK$2.55 billion), and it paid a dividend of 0.39 HK cents, a 39 per cent increase over 2011.

Twelve of the 31 brokerage firms that track the company set the target price at above HK$5, including JP Morgan, which expected it to hit HK$7. Geely's share price ended 0.5 per cent higher to close at HK$4.09 yesterday.