New | Geely shares soar to record on report it’s buying Proton’s Malaysia car assembly
A successful Proton bid will add 150,000 units of annual capacity to Geely’s output and give the Chinese carmaker access to Asean’s 10-member market
Shares of Geely Automobile Holdings, the Chinese owner of the Volvo brand of passenger vehicles, surged to a record, as mainland Chinese traders returning from a weeklong holiday piled into the stock on report it’s buying control of a factory in Malaysia.
Geely shares rose as much as 9 per cent in Friday trading, ending the day 8.4 per cent higher at HK$9.75 in Hong Kong. The stock more than tripled in the last 12 months, making it the best performer among 473 stocks on the Hang Seng Composite Index.
The successful bidder will get access to Proton’s Tanjung Malim assembly, with the annual production capacity of 150,000 vehicles in two shifts. Owning a car assembly in Malaysia also qualifies its owner to ship vehicles tax-free anywhere among the 10 members of the Association of Southeast Asian Nations, or Asean, with a combined population of 623 million people.
If the deal comes to fruition, it reflects Geely’s ambition to expand its footprint into Southeast Asia, said Robin Zhu, a Hong Kong-based auto analyst at Sanford C. Bernstein.
Still, Proton has had a tumultuous history since its establishment in the 1980s, and has been reporting losses, so “it will take Geely at least one or two years to turn it around,” said Zhu, who has an “underperform” recommendation on the Chinese carmaker.
As Japanese brands like Toyota, Nissan and Honda have long dominated the Southeast Asian market, Geely may need to pay very high cost to establish its presence there, he added.
Geely bought control of the Volvo brand of vehicles from Ford Motor Co. for US$1.8 billion in 2010.
Jeremy Lin, the Taiwanese American former New York Knicks guard who kicked off the global craze called Linsanity for his winning turnaround of the team, was hired to endorse Volvo.
Geely also owns Manganese Bronze, the company that assembles London’s iconic black cabs, and assembles the TX4 model in Shanghai to export to Britain.
Geely last month announced a 2017 sales target of 1 million vehicles, an increase of 34 per cent from last year. The company issued a profit alert last month, forecasting its 2016 net income to more than double from 2.26 billion yuan in 2015.
Its revenue per vehicle is expected at 76,000 yuan this year, up 11.1 per cent from last year, CMBI said.
Liang said Geely’s product line has been welcomed by Chinese consumer and will be further enriched in 2017.
Apart from the new global brand Lynk & Co, Geely will launch a couple of new cars, includes two new multi-purpose vehicle models, a new midsize SUV, a new hatchback, and the Emgrand PHEV version, extending its exposure to MPV, midsize SUV, and PHEV segments.
