The anticipated profit margin recovery! S&P upgrades the rating outlook of Geely Holding Group

On January 23, international renowned rating agency S&P announced that it raised the rating outlook of Zhejiang Geely Holding Group and its core subsidiary Geely Automobile to "Stable" and confirmed the long-term issuer credit rating of Zhejiang Geely Holding Group and Geely Automobile as "BBB-", and the long-term issue rating of senior unsecured notes of Zhejiang Geely Holding Group as "BBB-". This outlook upgrade fully reflected S&P's recognition of Zhejiang Geely Holding Group's competitiveness and development prospects in the new energy vehicle field. Regarding the reasons for the upgrade, S&P said that Zhejiang Geely Holding Group will solidify its position as one of the top new energy vehicle companies in China and Europe thanks to the continuous optimization and improvement of its product matrix. S&P believes that Zhejiang Geely Holding Group will continue to play the scale effect and cost control advantages, and continuously enhance its profitability, further improving its free cash flow and leverage ratio levels. S&P expects that the EBITDA Margin (pre-tax profit margin) of Zhejiang Geely Holding Group will rise to 7%-8% in the next two years, and the Debt-to-EBITDA (debt-to-pre-tax profit) will be reduced to 1.3-1.6 times. This forecast indicates that Zhejiang Geely Holding Group has strong ability in improving operating efficiency and controlling debt risks. The rating outlook upgrade will help enhance Zhejiang Geely Holding Group's image in the international capital market, reduce financing costs, and provide strong support for future development; at the same time, it will also be conducive to the Group expanding its brand influence in the domestic and foreign markets and further solidifying its leading position in the automotive field. In 2024, Zhejiang Geely Holding Group still outperformed the market trend, with a global total sales volume of 3.337 million vehicles, up about 22% YoY, of which new energy vehicle sales volume was 1.488 million, up about 52% YoY, with a new energy penetration rate of about 45%; overseas sales volume was 1.222 million, up about 21% YoY. Under the guidance of the "Taizhou Declaration", Zhejiang Geely Holding Group aims to achieve a vehicle sales volume of over 5 million by 2027, becoming a leader in the transformation of electrification and intelligence and high-quality development, and forming differentiated green intelligent transportation ecosystem competitiveness. (Eazytec)