Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 22.80, compared to the current price of HKD 18.30 [4]. Core Insights - The company reported a record high adjusted net profit margin of 8.6% in Q1 2024, with a non-IFRS net profit of CNY 6.5 billion, representing a year-on-year growth of 100.8% [2][3]. - Revenue for Q1 2024 reached CNY 75.5 billion, a 27% increase year-on-year, driven by strong growth across its three core business segments: smartphones, IoT, and internet services [2][3]. - The company aims to deliver 120,000 units of its new electric vehicle model, SU7, in 2024, with over 88,000 pre-orders already secured [3]. Summary by Sections Financial Performance - Q1 2024 revenue was CNY 75.5 billion, with smartphone, IoT, and internet service revenues increasing by 32.9%, 21.0%, and 14.5% year-on-year, respectively [2]. - The gross margin for Q1 2024 was 22.3%, with a historical high non-IFRS net profit margin of 8.6% [2][3]. - The smartphone business generated CNY 46.5 billion in revenue, with a gross margin of 14.8%, despite a slight decline in average selling price (ASP) [2][3]. Business Segments - IoT revenue grew to CNY 20.4 billion in Q1 2024, with a gross margin of 19.9%, marking a historical high [2]. - Internet services revenue reached CNY 8 billion, with a gross margin of 74.2%, driven by a 25% increase in advertising revenue [2]. Future Outlook - The company expects smartphone gross margins to stabilize between 12-13% for the full year 2024, despite potential fluctuations during promotional periods [2]. - The IoT segment is projected to maintain a gross margin above 18% for 2024, supported by strong sales of high-margin products [2]. - The internet services segment is anticipated to benefit from an increasing global user base and enhanced monetization capabilities [2].

Investment Rating - The report maintains a "Buy" rating for Xiaomi Group [1] Core Views - Xiaomi Group's Q1 2024 performance exceeded market expectations, with total revenue reaching 75.5 billion RMB, a year-on-year increase of 27%, and adjusted net profit hitting 6.5 billion RMB, a year-on-year increase of 101%, marking a historical high [2][3] Financial Performance Summary - **Total Revenue (Million RMB)**: - 2022A: 280,044 - 2023A: 270,970 - 2024E: 329,333 (21.54% YoY growth) - 2025E: 364,684 (10.73% YoY growth) - 2026E: 400,121 (9.72% YoY growth) [2] - **Net Profit Attributable to Shareholders (Million RMB)**: - 2022A: 2,474 - 2023A: 17,475 - 2024E: 16,130 (-7.70% YoY) - 2025E: 19,692 (22.08% YoY growth) - 2026E: 22,578 (14.65% YoY growth) [2] - **Latest Diluted EPS (RMB/share)**: - 2022A: 0.10 - 2023A: 0.70 - 2024E: 0.65 - 2025E: 0.79 - 2026E: 0.90 [2] Business Segment Performance - **Smartphone Business**: - Q1 revenue reached 46.5 billion RMB, a year-on-year increase of 33%, with a gross margin of 14.8%, up 3.6 percentage points YoY. The company shipped 40.6 million units, a 34% increase YoY, significantly surpassing the global average growth rate of 9.8% [3] - **IoT and Internet Business**: - IoT and lifestyle product revenue for Q1 was 20.4 billion RMB, a year-on-year increase of 21%, with a gross margin of 19.9%, a historical high. The internet business revenue reached 8 billion RMB, a historical high, with a year-on-year increase of 15% and a gross margin of 74.2% [4] Strategic Outlook - The company aims to deliver 100,000 vehicles this year, with a target of 120,000. As of April 30, the cumulative orders for the SU7 model reached 88,063 units. The company plans to expand its sales network to cover 46 cities by the end of the year [5] Earnings Forecast and Investment Rating - The forecast for net profit attributable to shareholders for 2024-2026 has been adjusted to 16.1 billion, 19.7 billion, and 22.6 billion RMB respectively. The latest closing price corresponds to P/E ratios of 28.3, 23.2, and 20.0 times for 2024, 2025, and 2026 [5]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company reported Q1 2024 earnings that exceeded market expectations, achieving revenue of 75.5 billion RMB, a year-on-year increase of 27%, and an adjusted net profit of 6.5 billion RMB, a year-on-year increase of 101%, marking a historical high [2][3] Summary by Sections Mobile Business - In Q1, the mobile business generated revenue of 46.5 billion RMB, a year-on-year increase of 33%, with a gross margin of 14.8%, up 3.6 percentage points year-on-year. The company shipped 40.6 million smartphones, a year-on-year increase of 34%, significantly outperforming the global average growth rate of 9.8%. The market share stood at 13.8%, maintaining a position among the top three globally for fifteen consecutive quarters [3] IoT and Internet Business - The IoT and lifestyle consumer products segment achieved revenue of 20.4 billion RMB in Q1, a year-on-year increase of 21%, with a gross margin of 19.9%, a historical high, up 4.1 percentage points year-on-year. Key categories showed healthy growth, with TWS shipments ranking second globally and first in mainland China. Wearable product shipments in mainland China increased by 70%, while tablet shipments globally rose by 93%, and smart home appliance revenue grew by 46% [4] - The internet business generated revenue of 8 billion RMB in Q1, a historical high, with a year-on-year increase of 15% and a gross margin of 74.2%, up 1.9 percentage points year-on-year. Advertising revenue was 5.5 billion RMB, and gaming revenue was 1.2 billion RMB. The user base continues to expand, with monthly active users reaching a historical high, creating a positive ecosystem with the mobile and IoT businesses [4] Automotive Business - As of April 30, the company had accumulated 88,063 orders for the SU7 model. The target for this year is to ensure the delivery of 100,000 vehicles, with aspirations to deliver 120,000. Starting in June, the company will implement a double-shift system in its factories, aiming to deliver at least 10,000 vehicles that month. The sales network will also be expanded, with plans to cover 46 cities with 219 stores and 86 cities with 143 service centers by the end of the year [5] Earnings Forecast and Investment Rating - The earnings forecast for the company has been adjusted upwards for 2024-2026, with expected net profits of 16.1 billion, 19.7 billion, and 22.6 billion RMB respectively. The latest closing price corresponds to P/E ratios of 28.3, 23.2, and 20.0 for the respective years, maintaining a "Buy" rating [5]

Investment Rating - The investment rating for Xiaomi Group-W (01810.HK) is maintained as "Buy" [2][3][10] Core Views - The sustained upward momentum in the automotive sector, along with high-end product strategies and export growth, is expected to enhance the long-term outlook for the company [3] - The expansion of the IoT business scale and gross margin has exceeded expectations, while short-term losses in innovative sectors like automotive are anticipated to be lower than market expectations [4][5] - The adjusted net profit forecasts for 2024-2026 are 20.3 billion, 22.7 billion, and 21.9 billion RMB, reflecting year-on-year growth rates of 5.3%, 11.9%, and -3.8% respectively [3][6] Summary by Relevant Sections Financial Performance - In Q1 2024, the company reported revenue of 75.5 billion RMB, a year-on-year increase of 27%, and an adjusted net profit of 6.5 billion RMB, up 100.8% year-on-year [4] - The mobile business generated revenue of 46.5 billion RMB, a 32.9% increase year-on-year, while the IoT business revenue reached 20.4 billion RMB, growing 21% year-on-year [4] - The gross margin for the IoT business improved to 19.9%, up 4.2 percentage points year-on-year, driven by a focus on high-margin products [4] Future Projections - The company expects mobile shipments in 2024 to be between 160 million and 165 million units, with a projected gross margin of 12-13% [5] - IoT business revenue growth is anticipated to slightly exceed 10% in 2024, supported by seasonal demand for home appliances and traditional marketing peaks [5] - The automotive sector's losses are expected to be lower than market forecasts due to sufficient prior orders and faster-than-expected production ramp-up [5] Valuation Metrics - The current stock price of 18.94 HKD corresponds to P/E ratios of 22.4, 20.0, and 20.8 for the years 2024-2026 [3][6] - The projected operating revenue for 2024 is 337.17 billion RMB, with a year-on-year growth of 24.4% [6] - The net profit for 2024 is expected to be 20.3 billion RMB, reflecting a 5.3% increase year-on-year [6]

Investment Rating - The report maintains a "Buy" rating for the company, with a target price (TP) raised to HKD 25.39 from the previous HKD 23.77, indicating a potential upside of 34% from the current price of HKD 18.94 [2][3][17]. Core Insights - The company reported a strong first quarter with revenue and net profit growth of 27% and 101% year-on-year, respectively, driven by improved gross profit margins (GPM) and a better revenue mix [2][12]. - The company aims to deliver 120 electric vehicles (EVs) annually, up from a previous target of 100, and plans to expand its retail strategy significantly in China [2][12]. - The report anticipates continued growth in smartphone market share, AIoT sales strength, and overseas internet revenue, contributing to profit growth through FY24E - FY26E [2][12][13]. Financial Summary - Revenue is projected to grow from HKD 270,970 million in FY23A to HKD 337,161 million in FY24E, reflecting a year-on-year growth of 24.4% [3][16]. - Adjusted net profit is expected to increase from HKD 19,273 million in FY23A to HKD 22,974 million in FY24E, representing a growth of 19.2% [3][16]. - The adjusted earnings per share (EPS) is forecasted to rise from RMB 0.77 in FY23A to RMB 0.92 in FY24E, with a price-to-earnings (P/E) ratio of 19.0x for FY24E [3][16]. Segment Performance - Smartphone revenue is expected to reach HKD 185,020 million in FY24E, with a year-on-year growth of 18% [12][16]. - AIoT and lifestyle products are projected to generate HKD 93,264 million in FY24E, reflecting a growth of 16% [12][16]. - Internet services are anticipated to contribute HKD 32,856 million in FY24E, with a year-on-year growth of 9% [12][16]. Valuation and Catalysts - The report assigns a valuation multiple of 15x FY24E P/E for the smartphone, AIoT, and internet businesses, while the EV business is valued at 0.75x FY25E P/S [17]. - Upcoming catalysts include progress in EV deliveries and growth in smartphone market share [2][17].

Investment Rating - The report maintains a "BUY" rating for Xiaomi with a new target price (TP) of HK$25.39, reflecting a 34% upside from the current price of HK$18.94 [2][18]. Core Insights - Xiaomi's 1Q24 results exceeded expectations, with revenue and net profit growing 27% and 101% year-over-year (YoY), respectively, driven by improved gross profit margins (GPM) and a favorable revenue mix [2][14]. - The company has set an ambitious target of 120,000 annual electric vehicle (EV) deliveries, up from the previous guidance of 100,000, indicating strong growth potential in the EV segment [2][18]. - The report anticipates continued earnings growth for Xiaomi, supported by smartphone market share gains, robust AIoT sales, and increasing overseas internet revenue [2][14]. Financial Summary - Revenue for FY24E is projected at RMB 337,161 million, representing a 24.4% YoY growth, with adjusted net profit expected to reach RMB 22,974 million, a 19.2% increase YoY [3][24]. - The adjusted EPS for FY24E is forecasted at RMB 0.92, significantly above consensus estimates [3][16]. - Gross margin is expected to be 21.1% for FY24E, reflecting a slight improvement from previous years [3][15]. Segment Performance - Smartphone revenue is projected to grow by 18% YoY in FY24E, driven by a 33.7% increase in global smartphone shipments in 1Q24 [2][13]. - AIoT and lifestyle products are expected to see a revenue increase of 21% YoY in FY24E, supported by strong sales in various product categories [2][13]. - Internet services revenue is anticipated to grow by 15% YoY in FY24E, indicating a solid performance in this segment [2][13]. Valuation - The report employs a sum-of-the-parts (SOTP) valuation method, assigning a P/E multiple of 15x to Xiaomi's smartphone, AIoT, and internet businesses, while the EV business is valued at 0.75x FY25E price-to-sales (P/S) [18][19]. - The total valuation for Xiaomi is estimated at RMB 581,175 million, translating to a target price of HK$25.39 per share [19][18].

Financial Data and Key Metrics - Revenue for Q1 2024 reached JPY75.5 billion, a 27% year-on-year growth [5] - Adjusted net profit was JPY6.5 billion, a 100.8% year-on-year increase [5] - Gross profit margin grew to 20.3% [5] - Cash resources stood at JPY127.3 billion [5] - Core profit achieved new highs [5] Business Line Data and Key Metrics - Smartphone business accounted for 61% of total revenue, with a 3.6% year-on-year growth [13] - IoT business revenue was JPY20.4 billion, up 21% year-on-year, with gross margin improving to 19.9% [14] - Internet services revenue reached JPY8 billion, a 45% year-on-year increase [15] - Overseas Internet business grew by 40%, contributing RMB2.5 billion [15] Market Data and Key Metrics - In the Middle East, market share grew by 7.1% to 20.9% [6] - Africa market share reached 10.6%, up 4.5% [6] - Southeast Asia market share was 16.5%, while Latin America reached 15.3%, up 2% [6] - Xiaomi ranked top three in 63 countries and top five in 67 markets [5] Company Strategy and Industry Competition - Xiaomi EV business launched successfully, with over 7,500 deliveries in April and 10,000 by mid-April [7] - The company plans to expand Xiaomi Home stores to 20,000 by 2026 [10] - Premiumization strategy in Mainland China has been completed, targeting the 4,000 to 5,000 market sector [10] - Xiaomi aims to achieve 100% renewable power usage by 2035 and carbon neutrality by 2040 [16] Management Commentary on Operating Environment and Future Outlook - Despite external uncertainties, Xiaomi's business remains stable and efficient [4] - The company is confident in overcoming challenges such as rising core component costs [12] - Xiaomi expects to deliver excellent results in 2024 due to improved capabilities [12] Other Important Information - Xiaomi repurchased RMB2.25 billion worth of shares, exceeding the total for 2023 [15] - The company has set ESG targets, including 30% reduction in emissions by 2030 and 100% renewable energy usage by 2035 [16] Q&A Session Summary Question: Synergy between EV, smartphone, and IoT businesses [20] - Xiaomi leverages its experience in consumer electronics and technology to enhance EV business [21] - The company focuses on customer stickiness and ecosystem integration to drive synergies [22] Question: Smartphone gross margin and cost control [23] - Xiaomi manages cost pressures through strategic inventory management and product structure optimization [24] - The company's scale and efficiency help mitigate the impact of rising component costs [25] Question: New retail expansion and overseas Internet business growth [27] - Xiaomi plans to expand its retail stores to 20,000 by 2026, focusing on upgrading existing stores and improving efficiency [28] - Overseas Internet business growth is driven by increased shipments and new customer acquisitions [33] Question: IoT gross margin and overseas expansion [35] - Xiaomi's IoT strategy focuses on self-research and product optimization, leading to improved gross margins [36] - The company plans to expand IoT products globally, focusing on compliance and market matching [39] Question: EV business delivery challenges and gross margin [41] - Xiaomi faces delivery challenges due to high demand, with delivery times extending to 30 weeks [42] - The company aims to double productivity by June to meet delivery targets [43] - Gross margin for EV business is expected to be between 5% to 10%, with more accurate targets to be set in Q2 [60] Question: Smartphone premiumization and inventory levels [45] - Xiaomi's premiumization strategy has shown success, with market share growth in the 5,000 to 6,000 price segment [46] - Inventory growth is attributed to strategic stocking, founder edition EV production, and preparation for peak seasons [47] Question: Middle East market growth and AI strategy [49] - Xiaomi's Middle East market grew by 113.3%, driven by strategic adjustments and human resource optimization [50] - The company focuses on AI integration in products and manufacturing efficiency, with plans to leverage AI for future growth [55] Question: IoT channel strategies in North America and Japan [57] - Xiaomi's IoT strategy in overseas markets focuses on cost efficiency and value for money, leveraging its own network and local platforms [58]

Xiaomi Corporation Q1 2024 Results Announcement 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 this presen ...

Financial Performance - Xiaomi's total revenue for Q1 2024 reached RMB 75.5 billion, a 27.0% year-over-year increase[3] - Adjusted net profit for Q1 2024 was RMB 6.49 billion, a 100.8% year-over-year increase[3] - Total revenue in Q1 2024 was RMB 75.5 billion, a 27.0% YoY increase from RMB 59.5 billion in Q1 2023[14] - Adjusted net profit under non-IFRS measures was RMB 6.49 billion in Q1 2024, compared to RMB 3.23 billion in Q1 2023[13] - Gross profit increased by 45.2% from RMB 11.6 billion in Q1 2023 to RMB 16.8 billion in Q1 2024, with gross margin improving from 19.5% to 22.3%[22] - Adjusted net profit surged 100.8% from RMB 3.2 billion in Q1 2023 to RMB 6.5 billion in Q1 2024[28] - Revenue increased by 3.1% from RMB 73.2 billion in Q4 2023 to RMB 75.5 billion in Q1 2024[30] - Gross profit increased by 7.8% from RMB 15.6 billion in Q4 2023 to RMB 16.8 billion in Q1 2024, with gross margin improving from 21.3% to 22.3%[37] - Profit for the period was RMB 4.2 billion in Q1 2024, compared to RMB 4.7 billion in Q4 2023[44] - Adjusted net profit increased by 32.2% from RMB 4.9 billion in Q4 2023 to RMB 6.5 billion in Q1 2024[44] - Revenue for the three months ended March 31, 2024, increased to RMB 75,506,822 thousand, up 27% from RMB 59,477,134 thousand in the same period last year[60] - Gross profit rose to RMB 16,829,717 thousand, a 45% increase compared to RMB 11,591,567 thousand in 2023[60] - Net profit attributable to the company's owners was RMB 4,182,061 thousand, slightly down from RMB 4,203,839 thousand in the same period last year[60] - Total revenue for the three months ended March 31, 2024, was RMB 75.51 billion, a significant increase from RMB 59.48 billion in the same period last year[67] - Net profit attributable to the company's owners for Q1 2024 was RMB 4,182,061 thousand, slightly down from RMB 4,203,839 thousand in Q1 2023[73] - Diluted earnings per share for Q1 2024 were RMB 0.16, compared to RMB 0.17 in Q1 2023[73] Smartphone Business - Global smartphone shipments in Q1 2024 reached 40.6 million units, a 33.7% year-over-year increase[4] - Xiaomi's global smartphone market share in Q1 2024 was 13.8%, maintaining its position in the top three globally[4] - Xiaomi's smartphone business revenue in Q1 2024 was RMB 46.5 billion, a 32.9% year-over-year increase[7] - Xiaomi's market share in the RMB 5,000–6,000 price segment in mainland China reached 10.1%, a 5.8 percentage point year-over-year increase[7] - Smartphone segment revenue increased by 32.9% from RMB 35.0 billion in Q1 2023 to RMB 46.5 billion in Q1 2024, driven by a 33.7% increase in smartphone shipments to 40.6 million units[16] - Smartphone segment gross margin improved from 11.2% in Q1 2023 to 14.8% in Q1 2024 due to product mix optimization and lower core component costs[22] - Smartphone revenue grew by 5.1% from RMB 44.2 billion in Q4 2023 to RMB 46.5 billion in Q1 2024, driven by a 4.9% increase in ASP to RMB 1,144.7 per unit[31] - Smartphone gross margin decreased from 16.4% in Q4 2023 to 14.8% in Q1 2024 due to higher core component costs and inventory provisions[37] - Smartphone segment revenue increased to RMB 46.48 billion, up from RMB 34.98 billion in the same period last year[67] - Gross profit for the smartphone segment was RMB 6.88 billion, up from RMB 3.93 billion in the previous year[67] IoT and Lifestyle Products - The number of connected IoT devices (excluding smartphones, tablets, and laptops) reached 786.1 million, a 27.2% year-over-year increase[4] - IoT and lifestyle products revenue reached RMB 20.4 billion in Q1 2024, a 21.0% YoY increase, with a segment gross margin of 19.9%, up 4.1 percentage points YoY[8] - IoT and lifestyle products revenue grew by 21.0% from RMB 16.8 billion in Q1 2023 to RMB 20.4 billion in Q1 2024, with tablet revenue surging 70.5% due to a 92.6% increase in global tablet shipments[17] - IoT and lifestyle products revenue slightly increased by 0.1% from RMB 20.3 billion in Q4 2023 to RMB 20.4 billion in Q1 2024, with tablet revenue up 16.6%[32] - IoT and lifestyle products gross margin improved from 13.9% in Q4 2023 to 19.9% in Q1 2024, driven by higher-margin product sales[37] - IoT and lifestyle products segment revenue grew to RMB 20.37 billion, compared to RMB 16.83 billion in the previous year[67] - Gross profit for the IoT and lifestyle products segment was RMB 4.05 billion, compared to RMB 2.65 billion in the same period last year[67] Internet Services - Internet services revenue hit a record RMB 8.0 billion in Q1 2024, up 14.5% YoY, with a gross margin of 74.2%, up 1.9 percentage points YoY[9] - Overseas internet services revenue grew 39.0% YoY to RMB 2.5 billion in Q1 2024, accounting for 31.2% of total internet services revenue, up 5.5 percentage points YoY[10] - Internet services revenue rose 14.5% from RMB 7.0 billion in Q1 2023 to RMB 8.0 billion in Q1 2024, with overseas internet services revenue jumping 39.0% to RMB 2.5 billion[18] - Internet services revenue rose by 2.1% from RMB 7.9 billion in Q4 2023 to RMB 8.0 billion in Q1 2024, primarily due to growth in gaming revenue[33] - Internet services segment revenue rose to RMB 8.05 billion, up from RMB 7.03 billion in the same period last year[67] - Gross profit for the internet services segment was RMB 5.98 billion, up from RMB 5.08 billion in the previous year[67] R&D and Innovation - Xiaomi's R&D expenditure in Q1 2024 was RMB 5.2 billion, a 25.4% year-over-year increase[4] - R&D expenses increased by 25.4% from RMB 4.1 billion in Q1 2023 to RMB 5.2 billion in Q1 2024, driven by investments in smart EV and other innovative businesses[22] - R&D expenses decreased by 5.6% from RMB 5.5 billion in Q4 2023 to RMB 5.2 billion in Q1 2024, with stable spending on smart EV and other innovative projects[38] - R&D expenses increased to RMB 5,159,387 thousand, up 25% from RMB 4,113,360 thousand in the previous year[60] Market Share and Regional Performance - Xiaomi's market share in the Middle East reached 20.9%, a 7.1 percentage point year-over-year increase[7] - Revenue from Mainland China accounted for 49.8% of total revenue, while global other regions contributed 50.2%[68] Cash and Financial Position - Xiaomi's cash reserves as of March 31, 2024, were RMB 127.3 billion, a 34.7% year-over-year increase[6] - The company's total cash resources as of March 31, 2024, amounted to RMB 127.3 billion[50] - Cash and cash equivalents stood at RMB 34.9 billion as of March 31, 2024, compared to RMB 33.6 billion as of December 31, 2023[47] - The net cash used in operating activities for Q1 2024 was RMB 9.3 billion, primarily due to a RMB 8.7 billion increase in inventory and a RMB 3.6 billion increase in prepayments and other receivables[51] - The net cash generated from investing activities for Q1 2024 was RMB 10.7 billion, mainly due to a RMB 6.9 billion net decrease in short-term investments at fair value and a RMB 6.2 billion net decrease in short-term bank deposits[52] - The net cash used in financing activities for Q1 2024 was RMB 100 million, primarily due to RMB 1.9 billion in share repurchases and RMB 1 billion in deferred consideration for intangible asset acquisitions[52] - The company's total borrowings as of March 31, 2024, were RMB 27.7 billion, a slight decrease from RMB 27.9 billion at the end of 2023[53] - Cash and cash equivalents increased to RMB 34,896,211 thousand, up from RMB 33,631,313 thousand at the end of 2023[62] - Net cash used in operating activities was RMB 9,287,058 thousand, compared to net cash generated from operating activities of RMB 1,218,761 thousand in 2023[64] - Net cash generated from investing activities was RMB 10,710,999 thousand, a significant improvement from net cash used in investing activities of RMB 1,622,151 thousand in 2023[64] - Total equity increased to RMB 167,593,801 thousand, up from RMB 164,261,768 thousand at the end of 2023[63] Investments and Share Repurchases - The company invested in approximately 430 companies with a total book value of RMB 65.2 billion as of March 31, 2024, a 2.2% decrease year-over-year[55] - The company repurchased 163,134,400 B-class shares for a total consideration of HKD 2,245,467,263 during Q1 2024[81] - The company repurchased a total of 163,134,400 shares in the first four months of 2024, with a total cost of approximately HKD 2,245,467,263[82] - The number of issued B shares decreased by 138,100,000 due to the cancellation of repurchased shares in January and February 2024, and the ongoing cancellation of shares repurchased in March and April 2024[82] - A total of 29,373,916 A shares were converted to B shares on March 14, 2024, with 26,454,431 shares converted by Lei Jun through Smart Mobile Holdings Limited and 2,919,485 shares converted by Lin Bin through Apex Star LLC[83] - The company has not purchased, sold, or redeemed any securities listed on the Stock Exchange during the three months ended March 31, 2024, and up to the date of the announcement[83] Corporate Governance and Compliance - The company has complied with all provisions of the Corporate Governance Code except for the separation of the roles of Chairman and CEO, which are currently held by Lei Jun[84] - The Audit Committee reviewed the unaudited interim results for the three months ended March 31, 2024, and discussed accounting policies, practices, and internal control matters with senior management and external auditors[85] - As of March 31, 2024, the company was not involved in any significant litigation or arbitration, and there were no pending or threatened significant claims against the company[86] - No other significant events affecting the group occurred between March 31, 2024, and the date of the announcement[87] Employee and Operational Metrics - The company had 35,423 full-time employees as of March 31, 2024, with 17,421 in R&D roles[56] - Employee benefit expenses rose to RMB 5.19 billion, compared to RMB 4.50 billion in the previous year[69] Inventory and Assets - Inventory increased to RMB 51,918,525 thousand in Q1 2024 from RMB 44,422,837 thousand at the end of 2023[76] - Total assets as of March 31, 2024, stood at RMB 326,971,545 thousand, compared to RMB 324,247,439 thousand at the end of 2023[62] - Short-term investments measured at fair value through profit or loss decreased to RMB 13,264,991 thousand in Q1 2024 from RMB 20,193,662 thousand at the end of 2023[73] - Long-term investments measured at fair value through profit or loss decreased to RMB 58,499,936 thousand in Q1 2024 from RMB 60,564,274 thousand at the end of 2023[73] - Trade receivables and bills decreased to RMB 11,213,539 thousand in Q1 2024 from RMB 12,150,928 thousand at the end of 2023[75] - Trade payables decreased to RMB 60,547,077 thousand in Q1 2024 from RMB 62,098,500 thousand at the end of 2023[79] Legal and Tax Issues - Xiaomi India's bank accounts with INR 45,750,963 thousand (approximately RMB 3,969,354 thousand) were restricted due to ongoing tax investigations[80] Smart EV Business - Xiaomi SU7 series cumulative orders reached 88,063 units by April 30, 2024, with 10,000 units delivered by May 15, 2024[11] - Xiaomi aims to deliver over 10,000 Xiaomi SU7 series vehicles monthly by June 2024[11] Miscellaneous - Global monthly active users of Mi Home app reached 89.1 million in March 2024, a 14.0% YoY increase[8] - Global monthly active users reached 658.1 million in March 2024, a 10.6% YoY increase, with 160.4 million in mainland China, up 9.7% YoY[9] - AIoT platform connected devices (excluding smartphones, tablets, and laptops) reached 786.1 million, a 27.2% YoY increase, with 15.2 million users connecting five or more devices, up 24.2% YoY[8] - Cost of goods sold and licensing fees increased to RMB 53.76 billion, up from RMB 42.76 billion in the same period last year[69] - Sales and marketing expenses increased by 33.6% from RMB 4.1 billion in Q1 2023 to RMB 5.5 billion in Q1 2024, driven by higher advertising and logistics costs[22] - Sales and marketing expenses decreased by 7.3% from RMB 5.9 billion in Q4 2023 to RMB 5.5 billion in Q1 2024, mainly due to reduced advertising and promotional activities[39] - Administrative expenses remained stable at RMB 1.5 billion in Q1 2024 compared to Q4 2023, driven by increased credit loss provisions for receivables, partially offset by reduced professional service fees[40] - Fair value changes of financial instruments at fair value through profit or loss shifted from a gain of RMB 600 million in Q4 2023 to a loss of RMB 1.2 billion in Q1 2024, primarily due to fair value losses on listed equity investments[40] - Share of net profit from investments accounted for using the equity method increased by 85.0% from RMB 84.0 million in Q4 2023 to RMB 155.4 million in Q1 2024[40] - Other income decreased by 39.9% from RMB 300 million in Q4 2023 to RMB 200 million in Q1 2024, mainly due to reduced VAT input tax credits and government subsidies[40] - Net finance income increased by 140.2% from RMB 600 million in Q4 2023 to RMB 1.5 billion in Q1 2024, driven by changes in the fair value of financial liabilities payable to fund investors[42] - Income tax expense increased by 7.7% from RMB 974.0 million in Q4 2023 to RMB 1,049.2 million in Q1 2024, primarily due to higher deductible expenses in Q4 2023[43] - Operating profit decreased to RMB 3,683,038 thousand, down 38% from RMB 5,900,209 thousand in 2023[60] - Total borrowings increased to RMB 27,705,897 thousand in Q1 2024 from RMB 27,857,345 thousand at the end of 2023[77]

Investment Rating - The report maintains a "Buy" rating for Xiaomi Group (1810.HK) and raises the target price to HKD 23.6, indicating a potential upside of 22% [1][4][10]. Core Insights - Xiaomi's core business is back on an upward trajectory, with strong profit release expected in Q1 2024. Revenue is projected to grow by 25% year-on-year, driven by increased smartphone shipments and significant growth in the IoT segment, particularly in major appliances. The internet business is also expected to maintain stable growth due to an expanding user base [1][3]. - The report anticipates adjusted net profit to approach RMB 5.5 billion, representing a year-on-year increase of nearly 70%. After accounting for approximately RMB 2.5 billion in expenses from new automotive ventures, the adjusted core business profit is expected to be around RMB 8 billion [1][3]. - The management's confidence in the business outlook has improved, particularly regarding the high-end smartphone strategy and automotive business. The delivery forecasts for Xiaomi's automotive segment have been raised to 100,000 units in 2024 and 208,000 units in 2025, with revenue projections adjusted to RMB 23.7 billion and RMB 50.8 billion, respectively [1][3]. Financial Summary - Revenue projections for Xiaomi from 2022 to 2026 are as follows: - 2022: RMB 280.0 billion - 2023: RMB 271.0 billion - 2024E: RMB 329.5 billion (22% growth) - 2025E: RMB 372.7 billion (13% growth) - 2026E: RMB 434.1 billion (16% growth) [3][6]. - Adjusted net profit forecasts are: - 2022: RMB 8.5 billion - 2023: RMB 19.3 billion - 2024E: RMB 13.8 billion (126% growth) - 2025E: RMB 20.3 billion (28% growth) - 2026E: RMB 23.9 billion (47% growth) [3][6]. - The report employs a sum-of-the-parts valuation method, assigning target P/E ratios of 14.0x for smartphones, 16.0x for IoT, and 14.0x for internet services, with a target price of HKD 23.6 [1][7]. Valuation Methodology - The valuation is based on stable profit release from core businesses, allowing Xiaomi to invest in building future technological barriers. The target price reflects the expected growth in various segments, including automotive [1][7].