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    175   KYG3777B1032

GEELY AUTOMOBILE HOLDINGS LIMITED

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Geely and Volvo to launch powertrain venture after merger scrapped

02/25/2021 | 03:28am EDT
People visit heavy machinery of Volvo at Bauma China, the International Trade Fair for Construction Machinery in Shanghai

BEIJING/STOCKHOLM (Reuters) - China's Geely Automobile and its Swedish sister company Volvo Cars will abandon merger plans but launch a new entity to combine their powertrain operations and expand cooperation on electric vehicles, the companies said.

A year ago the two said they were planning to merge, giving Volvo access to public markets, as global automakers pursue alliances to respond better to the cost of the transition to electric cars, tougher emission rules and autonomous driving.

Geely and Volvo on Wednesday said they had decided to preserve their existing separate corporate structures after "a detailed review of combination options" but would launch a new company to combine their existing powertrain operations.

The new entity, expected to become operational this year, will provide engines, transmissions systems and petrol-electric hybrid systems for use by both companies and other automakers.

"I firmly believe that this is the best combination, the best way forward for our companies," Volvo Cars Chief Executive Hakan Samuelsson told a joint news conference.

Asked if Volvo Cars would consider a stock market listing, he said there were currently no such plans.

The two companies will also focus on the development and sourcing of next-generation technologies, from connectivity and self-driving vehicles to car sharing and electrification, their statement added.

The companies did not disclose what savings they expected to make from the various collaborations.

Shares of Geely Auto rose more than 2% on Thursday.

"Overall, we see this solution as more of a cooperation than a merger as only the powertrain assets will be merged and thus below our expectation," a Daiwa analyst wrote.

Geely Auto will also forge a partnership with Volvo's sales network to help to boost growth for their jointly owned Lynk & Co car brand.

Last year Geely Auto sold 1.32 million cars while Volvo Cars sold 661,713 vehicles.

Geely Auto plans to raise 20 billion yuan ($2.93 billion) from a public share sale on Shanghai's Nasdaq-style STAR Market, which Chief Executive Gui Shengyue said would be unaffected by the new collaboration with Volvo.

Hangzhou-based Zhejiang Geely Holding Group, Geely Automobile's parent, bought Volvo Cars from Ford Motor Co in 2010. It also has stakes in Daimler AG and Malaysian carmaker Proton.

Geely President An Conghui said the company had plans to set up an independent entity for pure electric vehicles, confirming a Reuters report last week.

(Reporting by Yilei Sun in Beijing and Helena Soderpalm in Stockholm; Editing by Edmund Blair; Editing by David Goodman)

By Yilei Sun and Helena Soderpalm


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AB VOLVO 0.17% 211.1 Delayed Quote.9.29%
DAIMLER AG 1.47% 77.08 Delayed Quote.31.44%
GEELY AUTOMOBILE HOLDINGS LIMITED 4.82% 22.85 End-of-day quote.-13.77%
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04/15GEELY AUTOMOBILE  : Launches Standalone Electric Car Brand Zeekr
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More news
Financials
Sales 2021 109 B 16 747 M 16 747 M
Net income 2021 8 945 M 1 377 M 1 377 M
Net cash 2021 22 893 M 3 525 M 3 525 M
P/E ratio 2021 20,7x
Yield 2021 1,33%
Capitalization 188 B 28 894 M 28 967 M
EV / Sales 2021 1,52x
EV / Sales 2022 1,32x
Nbr of Employees 38 000
Free-Float 58,5%
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Technical analysis trends GEELY AUTOMOBILE HOLDINGS LIMITED
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TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
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Mean consensus BUY
Number of Analysts 30
Average target price 24,68 CNY
Last Close Price 19,16 CNY
Spread / Highest target 126%
Spread / Average Target 28,8%
Spread / Lowest Target -42,8%
EPS Revisions
Managers and Directors
NameTitle
Sheng Yue Gui Chief Executive Officer & Executive Director
Wen Ze Xu President
Shu Fu Li Chairman
Cheuk Yin Lee Independent Non-Executive Director
Sau Hung Yeung Independent Non-Executive Director
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1st jan.Capitalization (M$)
GEELY AUTOMOBILE HOLDINGS LIMITED-13.77%28 894
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