Morgan Stanley has released a research report stating that recent weekly auto data also indicates downside risks for industry sales in September, primarily due to the October 1 holiday.

The firm has assigned Geely Auto (00175) a target price of HK$27 and maintained an "Overweight" rating.

The report notes that investors may be waiting for clearer information regarding potential European Union plug-in hybrid electric vehicle (PHEV) tariffs and export VAT rebate reductions before increasing their exposure.

However, based on the firm's base-case scenario of approximately 6x valuation, Geely's valuation appears increasingly attractive.

Geely's scale, cost leadership, and self-funded/free cash flow (FCF) financial position should enable it to further strengthen its competitive position during an industry downturn, making Geely a relatively lower-risk, higher-quality Chinese auto stock investment within the firm's coverage universe.