Posts Tagged Geely Automotive

We have many clients whom have been building a position in Geely Automotive. The share price has bounced up about 20% in the last week. Ford Motor said it had completed the sale of Volvo Cars, its Swedish marque, to Chinese carmaking group Geely for $1.5bn.   The deal, agreed in March, marks the US company’s last disposal of an overseas car brand, and the biggest overseas acquisition yet by a Chinese automaker. Li Shufu, Geely’s chairman, said the signing marked “a historic day for Geely, which is extremely proud to have acquired Volvo Cars”.

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No stock in our portfolio has underperformed more this year than Geely Automotive. First, it was the big acquisition of Volvo. Then, fears that China would withdraw subsidies for consumers and now “strike” worries. Geely is the largest private automaker in China with a bright future and a battered share price.  Many industry analystst had a “buy” recommendation on Geely early this year when it was trading at 4.65 HK while it sits at 2.65 HK now.  Here is the latest from the FT and it seems to be a positive development. Geely, the Chinese carmaker, has approached Volkswagen’s head of US operations about becoming chief executive of Volvo cars.

Stefan Jacoby, chief executive of Volkswagen of America, is on a shortlist of candidates to head the Swedish carmaker, which Geely is buying from Ford Motor in a deal worth $1.8bn due to close in the third quarter of this year.

Denway Motors and now Geely are open buys for CR Capital clients. Chinese car makers are a no brainer and these are two companies that are well placed to mop up the long term growth. Geely is the largest Chinese automaker. These are the no frills guys that the middle class whom are buying their first car will go to. They are also in the process of a long term strategy to enter the luxury market which is why they bought Volvo and the London Black Cab company.
Take a look at their products.
http://www.geely.com/global/our_business/brands_products_fc.html