Core Insights - Xiaomi Group achieved record high revenue and adjusted net profit in Q2 2025, with revenue reaching 116 billion yuan, a year-on-year increase of 30.5%, marking three consecutive quarters of over 100 billion yuan [1] - Adjusted net profit was 10.8 billion yuan, exceeding Bloomberg's expectation of 10.2 billion yuan, and representing a year-on-year increase of 75% [1] - The performance was driven by strong IoT business growth, improved EV gross margins, and a slight offset from a decline in smartphone revenue [1] Smartphone Segment - Q2 smartphone revenue was 45.5 billion yuan, down 2% year-on-year, with a gross margin of 11.5%, a decrease of 0.7 percentage points [1] - The average selling price (ASP) was 1,073 yuan, down 2.7% year-on-year [1] - The company adjusted its annual shipment target to 175 million units, emphasizing product structure over sales volume [2] IoT Segment - Q2 IoT revenue reached 38.7 billion yuan, a year-on-year increase of 45%, exceeding expectations [2] - The gross margin for IoT was 22.5%, down 2.7 percentage points quarter-on-quarter, primarily due to promotional activities [2] - Smart home appliances saw significant growth, with air conditioner shipments exceeding 5.4 million units, a year-on-year increase of over 60% [2] Electric Vehicle Segment - Q2 revenue from the electric vehicle (EV) segment was 21.3 billion yuan, with 81,300 units delivered and an ASP of 253,700 yuan [3] - The operating loss in this segment was reduced to 300 million yuan from 500 million yuan in Q1, with a gross margin of 26.4% [3] - The management maintained the annual delivery target of 350,000 units and expects to achieve operational profitability in the second half of 2025 [3] Future Outlook - The company has raised its revenue forecasts for 2025-2027 to 485.4 billion, 597.2 billion, and 725.8 billion yuan, respectively [3] - Adjusted net profit forecasts for the same period are now 43.6 billion, 51.2 billion, and 64.9 billion yuan [3] - The company aims to enter the European market by 2027 and plans to expand its sales and service network in Southeast Asia and Europe [2][3]

Core Viewpoint - Xiaomi reported a strong 2Q25 performance with total revenue of 116 billion RMB, a year-on-year increase of 30.5% and a quarter-on-quarter increase of 4.2%, alongside an adjusted net profit growth of 75.4% to 10.8 billion RMB [1] Group 1: Automotive Business - In 2Q25, automotive deliveries reached a record high of 81,302 units, with revenue increasing by 14% quarter-on-quarter to 20.6 billion RMB [2] - The gross margin for smart electric vehicles and AI-related innovations rose from 15.4% in the same period last year to 26.4%, driven by scale effects, reduced core component costs, and a higher proportion of high-end model deliveries [2] - The company anticipates that the automotive business may achieve profitability in a single quarter or month in the second half of the year, supported by its high-end strategy [2] Group 2: Smartphone and IoT/Internet Business - The smartphone business faced challenges with revenue declining by 2.1% year-on-year to 45.5 billion RMB, and gross margin contracting to 11.5% due to intense competition in overseas markets [3] - IoT business revenue grew by 44.7% year-on-year to 38.7 billion RMB, driven by high-value smart home appliances, which saw a 66.2% increase [3] - Internet services continued stable growth with a 10.1% year-on-year revenue increase to 9.1 billion RMB, maintaining a high gross margin of 75.4% [3] Group 3: Financial Forecast and Valuation - Due to weak global smartphone demand, revenue forecasts for 2025-2027 were lowered by 2.2%/0.5%/0.2%, while net profit forecasts were raised by 9.5%/4.3%/7.8% to 44.31 billion RMB, 52.63 billion RMB, and 67.12 billion RMB respectively [3] - The target price is set at 65.4 HKD based on SOTP valuation, corresponding to a 30x PE for 2026, reflecting an adjustment from the previous target of 67.8 HKD [3]

Core Insights - The company reported a significant increase in total revenue and adjusted net profit for the first half of 2025, with total revenue reaching 227.2 billion yuan, up 38.2% year-on-year, and adjusted net profit at 21.5 billion yuan, up 69.8% [1] Automotive Sector - The automotive segment experienced accelerated growth, with revenue from smart electric and innovative businesses reaching 21.3 billion yuan, a year-on-year increase of 234% and a quarter-on-quarter increase of 14%, driven by continuous delivery growth and an increase in average selling price (ASP) [2] - The company delivered 81,000 vehicles in Q2, marking a year-on-year increase of 198% and a quarter-on-quarter increase of 7%, with an ASP of 254,000 yuan, up 11% year-on-year, primarily due to the increased delivery of the high-priced SU7 Ultra [2] - The automotive business gross margin improved to 26.4%, up 11 percentage points year-on-year and 3 percentage points quarter-on-quarter, benefiting from robust orders and capacity ramp-up [2] - The company anticipates that the launch of the YU7 model in June will further enhance quarterly deliveries and potentially lead to profitability within the year [2] Smartphone Sector - In Q2 2025, the smartphone business generated revenue of 45.5 billion yuan with a shipment volume of 42.4 million units, achieving year-on-year growth for eight consecutive quarters and maintaining a top-three position globally for five years [2] - The company achieved significant market share in the high-end segment, with a 24.7% market share in the 4,000-5,000 yuan price range, ranking first, and a 15.4% market share in the 5,000-6,000 yuan range, an increase of 6.5 percentage points year-on-year [2] - The successful launch and mass production of the self-developed 3nm flagship SoC, the Xuanjie O1, provide the company with a long-term competitive advantage [2] IoT Sector - The IoT and lifestyle consumer products segment achieved record revenue of 38.7 billion yuan in Q2, a year-on-year increase of 45%, with a gross margin of 22.5%, up 3 percentage points [3] - The smart home appliance category showed strong performance, with revenue growth of 66% year-on-year, air conditioner shipments exceeding 5.4 million units (up over 60% year-on-year), refrigerator shipments exceeding 790,000 units (up over 25% year-on-year), and washing machine shipments exceeding 600,000 units (up over 45% year-on-year) [3] - The company launched the Xiaomi AI glasses in June, featuring a 12-megapixel ultra-transparent optical lens, which is expected to further expand the IoT business space [3] Financial Forecast - The company projects revenues of 474.4 billion yuan, 588.7 billion yuan, and 696.4 billion yuan for 2025-2027, representing year-on-year growth rates of 30%, 24%, and 18% respectively; net profit attributable to shareholders is expected to be 43.7 billion yuan, 56.7 billion yuan, and 71.4 billion yuan, with corresponding year-on-year growth rates of 85%, 30%, and 26% [3]

Group 1: Financial Performance - In Q2 2025, the company's revenue reached 116 billion yuan, a historical high, with a year-on-year growth of 30% [1] - Adjusted net profit for Q2 2025 was 10.8 billion yuan, also a historical high, with a year-on-year increase of 75% [1] - Gross margin stood at 22.5%, reflecting a year-on-year increase of 1.8 percentage points [1] Group 2: Automotive Business - Revenue from the smart electric vehicle and AI innovation business in Q2 2025 was 21.3 billion yuan, with automotive revenue accounting for 20.6 billion yuan [1] - The gross margin for the automotive business reached 26.4%, an increase of 3.3 percentage points quarter-on-quarter [1] - The average selling price (ASP) of Xiaomi's vehicles in Q2 2025 was 253,000 yuan, up from 238,000 yuan in Q1 2025 [1] - The company delivered 81,302 new cars in Q2 2025, with over 30,000 units delivered in July 2025, setting a new monthly record [1] - As of June 30, 2025, Xiaomi had opened 335 automotive sales stores in 92 cities in mainland China, adding 100 stores in a single quarter [1] Group 3: IoT and Home Appliances - The IoT and lifestyle consumer products business achieved record revenue of 38.7 billion yuan in Q2 2025, a year-on-year growth of 45% [2] - The gross margin for this segment was 22.5%, reflecting a year-on-year increase of 2.8 percentage points [2] - Revenue from smart home appliances grew by 66% year-on-year, with air conditioner shipments exceeding 5.4 million units, a growth rate of over 60% [2] - Refrigerator shipments surpassed 790,000 units, with a year-on-year growth of over 25%, and washing machine shipments exceeded 600,000 units, growing by 45% [2] Group 4: Smartphone Business - Revenue from the smartphone business in Q2 2025 was 45.5 billion yuan, with a gross margin of 11.5% [2] - Smartphone shipments totaled 42.4 million units, reflecting a year-on-year growth of 0.6% [2] - High-end smartphone sales accounted for 27.6% of total sales in mainland China, an increase of 5.5 percentage points year-on-year [2] Group 5: Earnings Forecast - The company forecasts earnings per share for 2025, 2026, and 2027 to be 1.64 yuan, 2.10 yuan, and 2.61 yuan respectively, with adjustments made to revenue and certain profit and loss items [3] - The target price is set at 66.86 HKD, maintaining a 29 times PE valuation for comparable companies in 2026 [3]

Core Viewpoint - The company reported better-than-expected adjusted net profit for Q2 2025, driven by strong IoT business performance and higher automotive gross margins [1][2]. Financial Performance - Q2 2025 revenue reached 115.956 billion yuan, a year-on-year increase of 30.5%, slightly below expectations by 1.7% [1]. - Adjusted net profit was 10.831 billion yuan, reflecting a year-on-year growth of 75.4%, exceeding expectations by 6.4% [1]. - IoT revenue grew by 44.7% year-on-year to 38.712 billion yuan, with significant contributions from major appliances, wearables, and tablets [2]. Market Trends - The company maintained its position as the third-largest smartphone vendor globally, with a market share of 14.7% in Q2 2025, despite a slight year-on-year shipment increase of 0.6% to 42.4 million units [1]. - In the high-end smartphone segment in mainland China, the market share for devices priced between 5,000-6,000 yuan increased by 6.5 percentage points to 15.4% [1]. - The average selling price (ASP) of smartphones decreased by 2.7% year-on-year to 1,073 yuan due to a higher proportion of low-ASP models [1]. IoT and Internet Business - The IoT segment's gross margin decreased by 2.7 percentage points to 22.5% in Q2 2025, influenced by promotional activities [2]. - Internet business revenue grew by 10.1% year-on-year to 9.097 billion yuan, with a gross margin decline of 3.0 percentage points to 75.4% [2]. Automotive Sector - The company delivered 81,300 vehicles in Q2 2025, with an ASP of 253,700 yuan, and the gross margin improved by 3.27 percentage points to 26.4% [2]. - The outlook for automotive orders is positive, indicating potential profit elasticity from increased deliveries [2]. Profit Forecast and Valuation - The adjusted net profit forecast for 2025 was lowered by 5.9% to 46.139 billion yuan due to weak smartphone demand and rising raw material costs [2]. - The current stock price corresponds to a price-to-earnings ratio of 27.0 times for 2025 and 18.5 times for 2026, with a target price of 70.0 HKD, indicating a potential upside of 33.6% [2].

Core Viewpoint - DBS analysts believe that Xiaomi Group-W (1810.HK) is likely to see an increase in valuation due to its continuous market share growth across various business segments [1] Group 1: Business Performance - The company's profit margin expansion driven by the Internet of Things (IoT) business and steady growth in the electric vehicle (EV) sector is expected to offset the drag from the sluggish global smartphone growth in the long term [1] - IoT has become a structural profit driver for the company, showing widespread growth [1] - Xiaomi's market share in smart home appliances (air conditioners, refrigerators, washing machines, etc.) continues to increase [1] Group 2: Cost Management - The company is achieving cost savings through its own manufacturing and automation capabilities, which, combined with economies of scale, will continue to support structural improvements in its gross margin [1] Group 3: Analyst Rating - DBS maintains a "Buy" rating on Xiaomi [1]

Investment Rating - The report maintains a "Buy" rating for Xiaomi Group (1810 HK) with a target price adjusted to HKD 60.00, indicating a potential upside of 14.2% from the current closing price of HKD 52.55 [6][12][11]. Core Insights - The report highlights strong performance in the automotive sector for Q2 2025, with a revenue increase of 40% year-on-year and a record gross margin of 26.4%. The smartphone business showed a slight revenue decline of 2% year-on-year, primarily due to the impact of the REDMI A5 release on overseas average selling prices (ASP) [2][6]. - The management has set a sales target of 350,000 vehicles for the year, with Q2 2025 deliveries reaching 81,000 units and an ASP increase of 6.7% to RMB 254,000. The adjusted net loss for the automotive segment has narrowed to RMB 300 million, with expectations of achieving profitability in a single quarter or month within the year [6][7]. - The report projects revenue growth for Xiaomi, estimating revenues of RMB 483.02 billion for 2025 and RMB 605.82 billion for 2026, with corresponding net profits of RMB 45.98 billion and RMB 55.37 billion respectively [5][13]. Financial Overview - For Q2 2025, Xiaomi reported revenues of RMB 115.96 billion, a 30.5% increase year-on-year, and an adjusted net profit of RMB 10.83 billion, reflecting a 75.4% increase year-on-year. The gross margin for the quarter was 22.5%, up from 20.7% in Q2 2024 [7][6]. - The report includes revised financial forecasts, with 2025 revenue estimates reduced by 4% to RMB 483.02 billion and adjusted EPS lowered to RMB 1.67, down from RMB 1.80 [8][6]. - The report anticipates a continued focus on high-end smartphone models, projecting a recovery in smartphone gross margins in Q4 2025 as new high-end models are launched [6][7]. Valuation Metrics - The report provides a sum-of-the-parts (SOTP) valuation for 2026, estimating total revenues of RMB 605.82 billion, with the mobile and AIoT segment contributing RMB 423.84 billion and the automotive segment contributing RMB 181.98 billion [9][6]. - The price-to-earnings (P/E) ratio for the mobile and AIoT segment is projected at 25 times, while the automotive segment is valued at a price-to-sales (P/S) ratio of 2.2 times [9][6].

Investment Rating - The report maintains a "Recommended" rating for Xiaomi Group-W (stock code: 1810.HK) [1][4]. Core Views - The company achieved a revenue of 227.25 billion yuan in H1 2025, representing a year-on-year increase of 38.2%, and a net profit (NON-GAAP) of 21.51 billion yuan, up 69.8% year-on-year [3]. - The automotive business reached a record high in revenue and sales, with Q2 revenue of 21.26 billion yuan, a year-on-year increase of 233.9% and a quarter-on-quarter increase of 14.4% [3]. - The company plans to enter the European market by 2027, leveraging over 95% brand recognition to replicate its domestic success [3]. - The smartphone business showed strong performance in overseas markets, with Q2 shipments in Southeast Asia ranking first, and market share in Europe rising to 23.4% [3]. - R&D expenses increased by 35.8% year-on-year to 14.48 billion yuan in H1 2025, reflecting a commitment to core technology development [3]. Financial Performance Summary - For H1 2025, the company reported an operating profit of 26.56 billion yuan, a year-on-year increase of 177.5% [3]. - The automotive business's gross margin improved to 26.4% in Q2, up 11.0 percentage points year-on-year [3]. - The company forecasts revenues of 497.73 billion yuan, 630.36 billion yuan, and 724.57 billion yuan for 2025, 2026, and 2027 respectively, with corresponding net profits of 41.72 billion yuan, 55.71 billion yuan, and 66.79 billion yuan [4][6].

Investment Rating - The report maintains a "Recommended" rating for Xiaomi Group-W (stock code: 1810.HK) [1][4] Core Views - The company reported a significant increase in revenue and net profit for the first half of 2025, with operating income reaching 227.25 billion yuan, up 38.2% year-on-year, and net profit (NON-GAAP) at 21.51 billion yuan, up 69.8% year-on-year [3] - The automotive business achieved record revenue and sales, with Q2 revenue of 21.26 billion yuan, a year-on-year increase of 233.9%, and a gross margin of 26.4%, up 11.0 percentage points year-on-year [3] - The smartphone business showed strong performance in overseas markets, with Q2 revenue of 45.52 billion yuan, despite a slight decline in domestic ASP [3] - The company plans to enter the European market by 2027, leveraging its strong brand recognition to expand its global presence in the new energy vehicle sector [3] Financial Performance Summary - For H1 2025, the company achieved an operating profit of 26.56 billion yuan, a year-on-year increase of 177.5% [3] - The forecast for 2025-2027 indicates expected revenues of 497.73 billion yuan, 630.36 billion yuan, and 724.57 billion yuan, respectively, with corresponding net profits of 41.72 billion yuan, 55.71 billion yuan, and 66.79 billion yuan [4][6] - The EPS is projected to increase from 1.60 yuan in 2025 to 2.57 yuan in 2027, with a decreasing PE ratio from 32.78 to 20.48 over the same period [4][6] Research and Development - R&D expenses for H1 2025 rose by 35.8% to 14.48 billion yuan, reflecting the company's commitment to advancing core technologies in AI and electric vehicles [3]

Investment Rating - The investment rating for Xiaomi Group-W (01810.HK) is "Buy" (maintained) [1] Core Views - The brand momentum remains strong, awaiting the release of automotive production capacity and the initiation of a new vehicle cycle [1] - The forecast for net profit attributable to shareholders for 2025-2027 has been adjusted downwards to 415 billion, 555 billion, and 686 billion CNY, respectively, reflecting a year-on-year growth of 52%, 34%, and 24% [1][4] - The current stock price of 52.55 HKD corresponds to a PE ratio of 30.1, 22.6, and 18.2 for the years 2025-2027 [1] Financial Summary and Valuation Metrics - Revenue for 2023A is 270,970 million CNY, with a year-on-year change of -3.2% [8] - Net profit for 2023A is 19,273 million CNY, with a year-on-year change of 126.3% [8] - Gross margin for 2023A is 21.2%, and net margin is 7.1% [8] - The diluted EPS for 2025E is projected at 1.59 CNY, with a PE ratio of 30.1 [8] - The company aims to achieve profitability in its automotive and new business segments in the second half of 2025 [6]