XIAOMI(01810)2024-03-19 09:20Financial Performance - Xiaomi's total revenue for Q4 2023 reached RMB 73.24 billion, a year-on-year increase of 10.9%[2] - Adjusted net profit for Q4 2023 surged by 236.1% year-on-year to RMB 4.91 billion[2] - Full-year 2023 revenue was RMB 270.97 billion, a slight decrease of 3.2% year-on-year[3] - Adjusted net profit for 2023 increased by 126.3% year-on-year to RMB 19.27 billion[3] - Total revenue decreased by 3.2% to RMB 271.0 billion in 2023 compared to RMB 280.0 billion in 2022[16] - Operating profit surged to RMB 20.0 billion in 2023 from RMB 2.8 billion in 2022, with net profit reaching RMB 17.5 billion, up from RMB 2.5 billion in 2022[15] - Annual net profit surged by 598.3% from RMB 2.5 billion in 2022 to RMB 17.5 billion in 2023[38] - Adjusted net profit increased by 126.3% from RMB 8.5 billion in 2022 to RMB 19.3 billion in 2023[39] - Q4 2023 revenue increased by 10.9% to RMB 73.2 billion compared to RMB 66.0 billion in Q4 2022[41] - Revenue increased by 3.3% from RMB 709 billion in Q3 2023 to RMB 732 billion in Q4 2023[59] - The company recorded a profit of RMB 4.7 billion in Q4 2023, compared to RMB 4.9 billion in Q3 2023[73] - Adjusted net profit was RMB 4.9 billion in Q4 2023 and RMB 6.0 billion in Q3 2023[73] - Non-IFRS adjusted net profit for Q4 2023 was RMB 4,909.7 million with a net profit margin of 6.7%[75] - Annual profit under IFRS for 2023 was RMB 17,474.2 million with a net profit margin of 6.4%, while non-IFRS adjusted annual profit was RMB 19,272.8 million with a net profit margin of 7.1%[76] - Revenue for 2023 was RMB 270.97 billion, a decrease of 3.2% compared to RMB 280.04 billion in 2022[90] - Net profit for 2023 surged to RMB 17.47 billion, a significant increase from RMB 2.50 billion in 2022[90] - The company's total revenue for 2023 was RMB 270,970,141 thousand, with smartphone revenue contributing RMB 157,461,309 thousand, IoT and lifestyle products contributing RMB 80,107,740 thousand, internet services contributing RMB 30,107,494 thousand, and other segments contributing RMB 3,293,598 thousand[99] - Gross profit for 2023 was RMB 57,476,239 thousand, with smartphones contributing RMB 22,980,587 thousand, IoT and lifestyle products contributing RMB 13,078,596 thousand, internet services contributing RMB 22,333,950 thousand, and other segments showing a loss of RMB 916,894 thousand[99] - Revenue from mainland China accounted for 55.1% of total revenue in 2023, amounting to RMB 149,189,720 thousand, while revenue from other global regions accounted for 44.9%, amounting to RMB 121,780,421 thousand[100] Smartphone Business - Xiaomi's smartphone market share in the RMB 4,000-6,000 price segment in mainland China reached 28.2% in Q4 2023, ranking first[5] - Xiaomi's global smartphone shipments ranked in the top three in 51 countries and regions in 2023[5] - Xiaomi's smartphone business revenue in 2023 was RMB 157.5 billion, with global shipments of 145.6 million units[7] - Smartphone revenue decreased by 5.8% to RMB 157.5 billion in 2023, with shipments down 3.3% to 145.6 million units and ASP down 2.7% to RMB 1,081.7 per unit[18] - Smartphone segment revenue increased by 20.6% from RMB 36.7 billion in Q4 2022 to RMB 44.2 billion in Q4 2023, driven by a 23.9% increase in smartphone shipments to 40.5 million units, despite a 2.6% decline in ASP to RMB 1,091.7 per unit[43] - Smartphone revenue grew by 6.2% from RMB 416 billion in Q3 2023 to RMB 442 billion in Q4 2023, driven by higher ASP despite a 3.0% decline in shipment volume[61] - Smartphone ASP increased by 9.5% from RMB 997.0 in Q3 2023 to RMB 1,091.7 in Q4 2023, driven by the successful launch of premium models in mainland China[61] - Smartphone segment gross margin improved from 8.2% in Q4 2022 to 16.4% in Q4 2023, driven by product mix optimization and reduced inventory provisions[49] - Smartphone segment sales cost decreased by 11.7% from RMB 152.2 billion in 2022 to RMB 134.5 billion in 2023[25] IoT and Lifestyle Products - Xiaomi's IoT and lifestyle products revenue in 2023 was RMB 80.1 billion, with a gross profit margin of 16.3%, a year-on-year increase of 1.9 percentage points[9] - IoT and lifestyle products revenue increased by 0.4% to RMB 80.1 billion in 2023, driven by strong growth in smart home appliances and tablets[19] - IoT and lifestyle products segment revenue decreased by 5.1% from RMB 21.4 billion in Q4 2022 to RMB 20.3 billion in Q4 2023, primarily due to a 21.4% decline in smart TV and laptop revenue, partially offset by growth in tablets and smart home appliances[44] - IoT and lifestyle products revenue decreased by 1.6% from RMB 207 billion in Q3 2023 to RMB 203 billion in Q4 2023, mainly due to seasonal declines in smart home appliances[62] - Smart home appliance revenue grew nearly 40% year-on-year in 2023, driven by increased shipments of air conditioners, refrigerators, and washing machines in mainland China[19] - Smart home appliances revenue declined by 28.0% sequentially, mainly due to seasonal decreases in air conditioner sales[62] - IoT and lifestyle products segment sales cost decreased by 1.9% from RMB 68.3 billion in 2022 to RMB 67.0 billion in 2023[26] Internet Services - Xiaomi's internet services revenue in 2023 was RMB 30.1 billion, with a gross profit margin of 74.2%, a year-on-year increase of 2.4 percentage points[11] - Internet service revenue increased by 6.3% to RMB 30.1 billion in 2023, with overseas internet service revenue growing 24.1% to RMB 8.4 billion[21] - Internet services segment revenue grew by 9.9% from RMB 7.2 billion in Q4 2022 to RMB 7.9 billion in Q4 2023, mainly driven by increased advertising revenue[45] - Internet services revenue increased by 1.6% from RMB 78 billion in Q3 2023 to RMB 79 billion in Q4 2023, driven by growth in advertising revenue[63] - Internet services gross margin improved from 74.4% in Q3 2023 to 75.7% in Q4 2023, supported by higher advertising revenue contribution[66] - Internet services segment sales cost decreased by 2.5% from RMB 8.0 billion in 2022 to RMB 7.8 billion in 2023[27] AIoT Platform and User Growth - Global monthly active users reached a record high of 641.2 million in December 2023, up 10.2% year-on-year[4] - AIoT platform connected devices (excluding smartphones, tablets, and laptops) grew to 739.7 million, a 25.5% increase year-on-year[4] - Xiaomi's AIoT platform connected 739.7 million IoT devices (excluding smartphones, tablets, and laptops) as of December 31, 2023, a year-on-year increase of 25.5%[9] - Global monthly active users increased by 10.2% from 582.1 million in December 2022 to 641.2 million in December 2023[21] R&D and Innovation - R&D expenditure for 2023 was RMB 19.1 billion, a 19.2% increase year-on-year[4] - R&D expenses increased to RMB 19.1 billion in 2023, up from RMB 16.0 billion in 2022[15] - R&D expenses increased by 19.2% from RMB 16.0 billion in 2022 to RMB 19.1 billion in 2023, driven by smart EV and other innovative businesses[30] - R&D expenses increased by 16.2% from RMB 4.7 billion in Q4 2022 to RMB 5.5 billion in Q4 2023, primarily due to investments in smart EV and other innovative businesses[50] - R&D expenses increased by 10.0% from RMB 50 billion in Q3 2023 to RMB 55 billion in Q4 2023, primarily due to investments in smart EV and other innovative businesses[67] - R&D expenses rose by 19.1% to RMB 19.10 billion in 2023 from RMB 16.03 billion in 2022[90] Overseas Market Performance - Overseas market revenue accounted for 44.9% of total revenue in 2023, reaching RMB 121.8 billion[5] - Overseas internet service revenue grew 24.1% year-on-year to RMB 8.4 billion in 2023, accounting for 28.0% of total internet service revenue, with Q4 revenue at RMB 2.3 billion, up 23.8% year-on-year[12] Gross Profit and Margin - Xiaomi's overall gross profit margin reached 21.2% in 2023, a year-on-year increase of 4.2 percentage points[6] - Gross profit increased by 20.8% from RMB 47.6 billion in 2022 to RMB 57.5 billion in 2023, with gross margin rising from 17.0% to 21.2%[29] - Gross profit increased by 37.2% from RMB 11.4 billion in Q4 2022 to RMB 15.6 billion in Q4 2023, with gross margin improving from 17.2% to 21.3%[49] - Gross profit decreased by 3.1% from RMB 161 billion in Q3 2023 to RMB 156 billion in Q4 2023, with gross margin declining from 22.7% to 21.3%[66] - Gross profit increased by 20.8% to RMB 57.48 billion in 2023 from RMB 47.58 billion in 2022[90] Cash and Financial Position - Xiaomi's cash reserves reached RMB 136.3 billion as of December 31, 2023, a record high[6] - Cash and cash equivalents were RMB 33.6 billion as of December 31, 2023, compared to RMB 31.7 billion as of September 30, 2023[78] - The company's total cash resources amounted to RMB 136.3 billion as of December 31, 2023[81] - Operating cash flow for Q4 2023 was RMB 7.81 billion, a decrease from RMB 13.33 billion in Q3 2023[80] - Net cash used in investing activities for Q4 2023 was RMB 5.85 billion, primarily due to an increase in short-term investments at fair value[83] - Net cash from financing activities for Q4 2023 was RMB 43.3 million, mainly from borrowings of RMB 3.4 billion[83] - Total borrowings increased from RMB 24.8 billion as of September 30, 2023 to RMB 27.9 billion as of December 31, 2023[83] - Capital expenditures for Q4 2023 were RMB 2.14 billion, an increase from RMB 1.8 billion in Q3 2023[84] - Cash and cash equivalents grew to RMB 33.63 billion in 2023, compared to RMB 27.61 billion in 2022[94] - Operating cash flow turned positive at RMB 41.30 billion in 2023, a significant improvement from a negative RMB 4.39 billion in 2022[94] - Short-term investments measured at fair value through profit or loss surged to RMB 20,193,662 thousand in 2023 from RMB 9,845,910 thousand in 2022[106] - Long-term investments measured at fair value through profit or loss reached RMB 60,564,274 thousand in 2023, up from RMB 56,385,345 thousand in 2022[106] - Total borrowings increased slightly to RMB 27,857,345 thousand in 2023 from RMB 23,643,002 thousand in 2022, with a notable rise in unsecured borrowings[109] Employee and Compensation - Total compensation expenses for 2023 were RMB 18.9 billion, a 14.1% increase from RMB 16.6 billion in 2022[87] - The company had 33,627 full-time employees as of December 31, 2023, with 17,800 in R&D roles[87] - Employee benefit expenses for 2023 were RMB 18,935,182 thousand, an increase from RMB 16,607,997 thousand in 2022[101] Investments and Assets - The company invested in over 430 companies with a total book value of RMB 67.1 billion as of December 31, 2023, representing a 5.0% year-over-year increase[86] - Total assets increased to RMB 324.25 billion in 2023, up from RMB 273.51 billion in 2022[92] - Property and equipment increased by 50.1% to RMB 13.72 billion in 2023 from RMB 9.14 billion in 2022[92] - Intangible assets nearly doubled to RMB 8.63 billion in 2023 from RMB 4.63 billion in 2022[92] - Total equity rose to RMB 164.26 billion in 2023, up from RMB 143.92 billion in 2022[93] - Trade receivables and notes increased to RMB 12,150,928 thousand in 2023 from RMB 11,795,074 thousand in 2022, with a credit loss provision of RMB 316,958 thousand[107] - Inventory decreased to RMB 44,422,837 thousand in 2023 from RMB 50,437,891 thousand in 2022, with a significant reduction in impairment provisions[108] - Trade payables rose to RMB 62,098,500 thousand in 2023 from RMB 53,093,543 thousand in 2022, with the majority due within three months[111] Share Repurchases and Dividends - The company repurchased 264,700,000 B-class shares for a total consideration of HKD 3,375,106,659 during the year[113] - Total repurchased B shares in 2023 and 2024 amounted to 264,700,000 shares, with a total cost of approximately HKD 3,375,106,659[114] - In May, June, and July 2023, 9,061,798 A shares were converted to B shares at a 1:1 ratio, with 8,161,142 A shares converted by Lei Jun and 900,656 A shares by Lin Bin[115] - In September and October 2023, 9,814,592 A shares were converted to B shares at a 1:1 ratio, with 8,839,116 A shares converted by Lei Jun and 975,476 A shares by Lin Bin[116] - In November and December 2023, and January and February 2024, 29,373,916 A shares were converted to B shares at a 1:1 ratio, with 26,454,431 A shares converted by Lei Jun and 2,919,485 A shares by Lin Bin[116] - The company did not declare a final dividend for the year ended December 31, 2023[122] Corporate Governance and Compliance - The company complied with all provisions of the Corporate Governance Code except for the separation of the roles of Chairman and CEO, which are both held by Lei Jun[117] - The Audit Committee reviewed the audited consolidated financial statements for the year ended December 31, 2023, and discussed accounting policies and internal control matters with senior management and external auditors[119] - The company has no significant litigation or arbitration as of December 31, 2023[121] - The company's annual report will be published on the HKEX and company websites and sent to shareholders[123] Other Financial Metrics - Game business revenue reached a record high of RMB 4.4 billion in 2023, a year-on-year increase of 7.0%, with Q4 revenue at RMB 1.0 billion[12] - Xiaomi's advertising business revenue in 2023 was RMB 20.5 billion, a year-on-year increase of 11.2%[11] - Sales and marketing expenses remained stable at RMB 5.9 billion in Q4 2023 compared to Q4 2022, with increased advertising costs offset by reduced logistics expenses[51] - Other income decreased from RMB 0.6 billion in Q4 2022 to RMB 0.3 billion in Q4 2023, mainly due to reduced government subsidies[54] - Sales and marketing expenses rose by 24.8% from RMB 47 billion in Q3 2023 to RMB 59 billion in Q4 2023, driven by increased promotional and advertising activities[68] - Share of net profit from equity-accounted investments increased by 307.2