Xiaomi Corporation 2025 Fourth Quarter and Annual Results Disclaimer By attending the meeting where this presentation is made, or by reading the presentation materials, you agree to be bound by the following limitations: The information in this presentation has been prepared by representatives of Xiaomi Corporation (the "Company", and together with its subsidiaries, the "Group") for use in presentations by the Group and does not constitute a recommendation regarding the securities of the Group. No part of t ...

Core Viewpoint - Xiaomi reported a significant decline in quarterly net profit due to rising memory-chip prices and weak consumer demand in a major market [1] Group 1: Financial Performance - The company experienced a slump in quarterly net profit, indicating financial challenges [1] Group 2: Market Conditions - The decline in profit is attributed to soaring memory-chip prices, which have impacted the company's cost structure [1] - Subdued consumption in one of the world's largest consumer markets has further exacerbated the situation for the company [1]

Core Viewpoint - Huawei's HarmonyOS is making significant strides in the automotive sector, launching nine new models at its spring conference, but the absence of key figure Yu Chengdong has raised questions about the brand's emotional connection with consumers [2][5][35]. Group 1: Product Launch and Performance - HarmonyOS has achieved cumulative deliveries exceeding 1.3 million vehicles in just 43 months, setting a record for the fastest delivery of a new automotive brand in China [4][18]. - The new product lineup includes nine vehicles across a price range of 150,000 to 1,000,000 yuan, featuring seven new color options and advanced technology such as solid-state LiDAR and ADS 4 [9][18]. - The introduction of vibrant colors like "Star Rose Pink" and "Night Purple" signifies a shift towards more personalized and fashionable vehicle aesthetics, moving away from traditional black, white, and gray [10][13][15]. Group 2: Market Position and Competition - HarmonyOS is positioned to compete with Xiaomi, which has a strong market presence driven by emotional marketing and personal branding, particularly through its founder Lei Jun [20][21]. - The automotive market is experiencing structural changes, with a significant shift towards third-tier cities, where emotional value and consumer engagement are becoming critical [23]. - HarmonyOS's strategy emphasizes technical superiority, but it risks losing consumer interest if it does not also focus on emotional engagement and storytelling [30][35]. Group 3: Leadership and Brand Identity - The absence of Yu Chengdong highlights a potential shift in Huawei's branding strategy, moving from a personal brand to a more collective brand identity, which may dilute emotional connections with consumers [35][41]. - The five leaders of the new vehicle series are encouraged to develop their own narratives and become the "rock stars" of their respective brands, enhancing consumer engagement [44][47]. - The future success of HarmonyOS will depend on its ability to create relatable figures who can connect with consumers on an emotional level, rather than relying solely on technical specifications [48][49].

Financial Performance - Total revenue for 2025 reached RMB 457.29 billion, a year-on-year increase of 25.0%[5] - Adjusted net profit for 2025 was RMB 39.17 billion, reflecting a year-on-year growth of 43.8%[5] - The company achieved an annual profit of RMB 41.6 billion in 2025, compared to RMB 23.6 billion in 2024, reflecting strong financial performance[37] - The net profit for the year ending December 31, 2025, increased by 76.3% to RMB 41.6 billion from RMB 23.6 billion in 2024[68] - Basic earnings per share rose to RMB 1.62 in 2025, compared to RMB 0.95 in 2024, reflecting improved profitability[175] Revenue Breakdown - The mobile and AIoT segment accounted for 76.8% of total revenue in 2025, while the smart electric vehicle and AI innovation segment contributed 23.2%[38] - In 2025, Xiaomi's "Mobile × AIoT" segment revenue reached RMB 351.2 billion, a historical high, with a year-on-year growth of 5.4%[18] - Xiaomi's smartphone business revenue in 2025 was RMB 186.4 billion, with a gross margin of 10.9%, and global smartphone shipments reached 165.2 million units[19] - By the end of 2025, Xiaomi's IoT and lifestyle consumer products revenue hit a historical high of RMB 123.2 billion, growing 18.3% year-on-year, with a gross margin of 23.1%[23] - The internet services business generated revenue of RMB 37.4 billion in 2025, a year-on-year increase of 9.7%, with a gross margin of 76.5%[27] Segment Performance - The smartphone and AIoT segment generated revenue of RMB 35.12 billion in 2025, up 5.4% year-on-year[6] - The smart electric vehicle and AI innovation segment saw revenue soar to RMB 10.61 billion, a staggering 223.8% increase year-on-year[6] - Revenue from smart electric vehicles and AI innovation business surged by 223.8% from RMB 32.8 billion for the year ending December 31, 2024, to RMB 106.1 billion for the year ending December 31, 2025[45] - The number of smart electric vehicle deliveries increased by 200.4% from 136,854 units for the year ending December 31, 2024, to 411,082 units for the year ending December 31, 2025[45] User Engagement - Monthly active users reached a record high of 754.1 million by December 2025, a 7.4% increase year-on-year[7] - The number of connected IoT devices reached 1.08 billion, representing a 19.3% year-on-year growth[7] - Xiaomi's AIoT platform connected 1,079.2 million IoT devices by December 31, 2025, a year-on-year increase of 19.3%[23] Research and Development - Research and development expenditure for 2025 was RMB 33.1 billion, a 37.8% increase compared to the previous year[10] - Xiaomi's cumulative R&D spending over the past five years reached RMB 105.5 billion, with plans to exceed RMB 200 billion in the next five years[10] - R&D expenses increased by 37.8% from RMB 24.1 billion in 2024 to RMB 33.1 billion in 2025, reflecting higher investment in electric vehicles and AI[58] Operating Expenses - Operating expenses rose by 32.6% from RMB 55 billion in 2024 to RMB 73 billion in 2025, with significant increases in R&D and sales expenses[57] - Sales and marketing expenses surged by 19.5% from RMB 8.3 billion in Q3 2025 to RMB 9.9 billion in Q4 2025, primarily due to increased advertising related to mobile × AIoT and smart electric vehicles[137] Cash Flow and Investments - The total capital expenditure for 2025 was RMB 18,157.0 million, with significant investments in smart electric vehicles and AI-related innovations totaling RMB 12,023.8 million[165] - The company reported a decrease in cash and cash equivalents of RMB 8,595.9 million for Q4 2025[160] - As of December 31, 2025, cash and cash equivalents amounted to RMB 26,914.4 million, down from RMB 35,548.0 million at the beginning of the period[160] Inventory and Liabilities - Inventory for the mobile AIoT segment rose to RMB 74.76 billion in 2025, up from RMB 60.91 billion in 2024, an increase of 22.8%[191] - Total liabilities increased to RMB 241.77 billion in 2025 from RMB 213.95 billion in 2024, marking a rise of 13%[179] Market Strategy - Xiaomi's new retail strategy resulted in approximately 18,000 Mi Home stores in mainland China by December 2025, with a net increase of over 3,000 stores[17] - The company aims to deliver 550,000 vehicles in 2026, focusing on expanding its sales network with 477 car sales stores established in 138 cities by the end of 2025[33]

Core Viewpoint - The meeting between Guangdong's provincial leaders and Xiaomi's chairman highlights the potential for deepening cooperation to support economic development in Guangdong, emphasizing mutual benefits and a favorable business environment [1][2]. Group 1: Meeting Overview - Guangdong's Vice Governor and Provincial Governor Meng Fanli welcomed Xiaomi's chairman Lei Jun, expressing gratitude for Xiaomi's contributions to the province's economic and social development [1]. - Meng noted Guangdong's strengths as a major economic, population, consumption, and manufacturing hub, with significant potential in new-generation electronic information and new energy vehicles [1]. - The governor encouraged Xiaomi to strengthen its presence in Guangdong and explore more collaborative opportunities for mutual benefit [1]. Group 2: Xiaomi's Response - Lei Jun thanked Guangdong for its strong support and acknowledged the province's excellent business environment, complete industrial support, and robust market demand [1]. - He indicated that Xiaomi plans to expand its cooperation with Guangdong to better assist in the province's high-quality development [1].

Core Viewpoint - The meeting between Guangdong's provincial leaders and Xiaomi's chairman highlights the potential for deepening cooperation to support Guangdong's economic development and Xiaomi's expansion in the region [1][2]. Group 1: Meeting Overview - Guangdong's Vice Governor and Provincial Governor Meng Fanli welcomed Xiaomi's chairman Lei Jun and his team, expressing gratitude for Xiaomi's contributions to the province's economic and social development [1]. - Meng emphasized Guangdong's strengths as a major economic, population, consumption, and manufacturing hub, particularly in new-generation electronic information and new energy vehicles, indicating significant market potential for collaboration [1]. Group 2: Future Cooperation - Lei Jun acknowledged Guangdong's favorable business environment, complete industrial support, and strong market demand, indicating a solid foundation for future cooperation [1]. - Xiaomi plans to further explore larger cooperation opportunities to assist in Guangdong's high-quality development [1].

Summary of Xiaomi Corp Conference Call Company Overview - **Company**: Xiaomi Corp (Ticker: 1810.HK) - **Industry**: Greater China Technology Hardware - **Market Cap**: US$118.34 billion - **Current Stock Price**: HK$36.32 - **Price Target**: HK$62.00, representing a 71% upside potential from the current price [5][5][5] Key Takeaways 1. **Xiaomi EV Success**: The company is confident that its electric vehicle (EV) will achieve success, supported by significant viewer engagement during the SU7 launch, with over 55 million viewers [1][1][1] 2. **Product Enhancements**: The new SU7 model features improvements such as: - Longer driving range - Stronger motor and chassis - Enhanced safety measures - More comfortable seating - New color options - Better noise control and sun protection - Smoother smart cabin experiences [2][2][2] 3. **AI Integration in EVs**: Xiaomi has launched the XLA Cognitive Large Model, which enhances the ADAS experience and includes features like automated parking assistance in shopping malls [3][3][3] 4. **Investment in AI**: Xiaomi is committed to investing Rmb60 billion in AI over the next three years, demonstrating its competitiveness in the AI sector, as evidenced by the performance of its Hunter Alpha model, which topped the daily API call volume list on OpenRouter [4][4][4] Financial Projections - **Revenue Estimates**: - FY 2024: Rmb365.9 billion - FY 2025: Rmb457.1 billion - FY 2026: Rmb464.1 billion - FY 2027: Rmb572.3 billion [5][5][5] - **Earnings Per Share (EPS)**: - FY 2024: Rmb1.07 - FY 2025: Rmb1.43 - FY 2026: Rmb0.97 - FY 2027: Rmb1.35 [5][5][5] Risks and Considerations - **Upside Risks**: - Better-than-expected orders and customer feedback for the second EV model - Successful ramp-up of offline expansion in China - Increased market share in overseas markets [11][11][11] - **Downside Risks**: - Intense competition in the EV market - Pressure on smartphone gross margins due to inventory de-stocking and weak demand - Concerns regarding smart EV investments [11][11][11] Analyst Ratings - **Current Rating**: Overweight - **Industry View**: In-Line - **Analyst**: Andy Meng, CFA [5][5][5] Conclusion Xiaomi Corp is positioned for growth with its innovative EV offerings and significant investments in AI technology. The company’s strong viewer engagement during product launches and ambitious revenue targets indicate a positive outlook, although it must navigate competitive pressures and market dynamics.

Core Insights - Embodied intelligence is driving a technological shift from "perceiving the world" to "acting in the world," marking the beginning of an industrial transformation that integrates software, hardware, data, and scenarios [3] - The embodied intelligence industry is transitioning from research and development to industrialization and commercialization, with a focus on core technologies, product solutions, and value realization in various scenarios [3] Group 1: Industry Development - The industry is addressing core technical bottlenecks such as the lack of standardization in upstream hardware ecosystems and the maturity of motion control technologies [5] - Efforts are being made to promote hardware standardization and software ecosystem development to create an open and collaborative industrial ecosystem [5] - The cost structure of humanoid robots has significantly decreased, with single-unit costs dropping from millions to hundreds of thousands, approaching large-scale production standards [14] Group 2: Key Players and Components - Notable companies in the embodied intelligence sector include Nvidia, Huawei, Alibaba Cloud, and various others across hardware, software, and solutions [8][10] - The core components of humanoid robots include actuators and sensors, which account for over 60% of the total cost, highlighting the importance of domestic alternatives in these areas [15] Group 3: Application Areas - The application of embodied intelligence has expanded beyond traditional automation to flexible manufacturing, autonomous decision-making, and collaborative industrial ecosystems [23] - In the commercial service sector, embodied intelligence has achieved comprehensive scene coverage, with a focus on precise scene segmentation and human-like interaction experiences [26] - The special service sector has seen significant breakthroughs in adapting to extreme environments and executing tasks, showcasing the core value of embodied intelligence in replacing humans in hazardous situations [30]

Key Points - Huawei has announced the full return of its smartphone lineup with the launch of the Enjoy 90 series, featuring Kirin chips and the HarmonyOS [4][5] - The Enjoy 90 series is part of a broader product line that includes Mate, Pura, Pocket, and nova series, all equipped with Kirin processors [5] - Huawei's HarmonyOS has surpassed 50 million devices, with daily new device activations exceeding 150,000 and over 350,000 applications and services available [5] Domestic News - Horizon Robotics CEO Yu Kai responded to a circulating comment suggesting that XPeng's autonomous driving capabilities are exaggerated, emphasizing that the individual does not represent the company's views [8][9] - XPeng has established a Robotaxi division, planning to initiate passenger demonstration operations in the second half of the year [25][26] - Cheetah Mobile's chairman publicly apologized to 360's Zhou Hongyi for impulsive comments made in a group chat, clarifying that the remarks were not intended for public consumption [15] Investment and Financing - Lightyear Technology announced the completion of a $100 million Series D financing round, with funds allocated for advanced AI technology development and talent acquisition [18] - Qingxin Yichuang has secured nearly $15 million in Pre-A financing, focusing on the development of small humanoid robots [22][23] - Fast Innovation successfully listed on the Hong Kong Stock Exchange, raising approximately HKD 1.664 billion, with significant oversubscription in its IPO [49][50] International News - Meta plans to reduce its reliance on external auditors by 40%, shifting towards AI tools for content moderation [39] - The FCC has banned the import of all foreign-made consumer-grade routers, citing national security concerns, while allowing exemptions under certain conditions [40] - Apple CEO Tim Cook confirmed that 80 of the top 100 suppliers are based in China, highlighting the country's critical role in Apple's supply chain [42]

Core Viewpoint - The recent price increases in smartphones, initiated by OPPO and followed by other brands, are primarily driven by the soaring costs of storage chips, which have seen a dramatic price surge of 90%-95% since last year due to increased demand from AI infrastructure [7][8]. Price Adjustments - OPPO has adjusted prices for its A series, K series, and some OnePlus models, while vivo has also raised prices for certain models. Other brands like Redmi and Honor have made slight price increases as well [7][8]. - The price adjustments are particularly pronounced in the mid-range and low-end segments, with many affected models originally priced between 1500 to 2500 yuan [9][10]. Cost Structure Analysis - Smartphones' core components are categorized into elastic costs (screen, camera, processor) and rigid costs (battery, memory, storage). The latter, particularly storage chips, have a significant impact on the overall cost structure, especially for mid-range devices [9][10]. - For example, the storage cost for an iPhone 17 Pro Max is approximately 300 yuan, which is negligible compared to its overall price, but for a mid-range device priced around 2000 yuan, the storage cost can account for as much as 43% of the BOM cost [11][12]. Market Dynamics - The current storage price surge is reminiscent of the 2016-2018 cycle, which led to a significant reshaping of the smartphone market, particularly affecting lower-end brands that are more sensitive to price changes [14][15]. - The concentration of market power has shifted, with top brands like Xiaomi, OPPO, and Huawei gaining more control, while many second-tier brands have exited the market due to their inability to cope with rising costs [18][24]. Supply Chain Challenges - The supply chain dynamics have changed, with major storage chip manufacturers prioritizing higher-margin products for data centers over smartphone components, leaving smartphone manufacturers with less negotiating power [24][25]. - As a result, the burden of increased costs is being passed on to consumers, as manufacturers struggle to maintain margins without the ability to transfer costs to suppliers or competitors [25][27].