XIAOMI CORP(1810.HK)1Q25 RESULTS：PREMIUMISATION LED TO RECORD HIGH IOT AND EV GPM

Core Viewpoint - Xiaomi reported strong 1Q25 results with revenue and adjusted net income increasing by 47% and 65% YoY to RMB111 billion and RMB11 billion respectively, surpassing consensus estimates [1][2] Financial Performance - Revenue reached RMB111 billion, a 47% YoY increase, with improved gross profit margin (GPM) at 22.8%, up 2.2 percentage points QoQ, beating consensus by 2% [2] - Adjusted net income of RMB10.7 billion exceeded estimates by 10% and 18% [2] - Operating profit margin (OPM) improved by 3.6 percentage points QoQ to 9%, indicating effective operational expense leverage [2] Smart EV Business - Smart EV revenue rose by 11.5% QoQ to RMB18.6 billion, with GPM expanding 2.7 percentage points QoQ to 23.2%, driven by a favorable sales mix and improved scale effects [3] - Adjusted net loss for the EV segment decreased to RMB195 million from RMB730 million in 4Q24, reflecting better GPM and strict OPEX control [3] Smartphone Segment - Smartphone revenue reached RMB51 billion, a 9% YoY increase, supported by a 3% rise in shipments to 42 million and a 6% increase in average selling price (ASP) to RMB1,211 [4] - GPM for smartphones improved to 12.4%, with expectations for further increases due to a higher premium product mix and lower component costs [4] IoT Segment - IoT revenue and GPM continued to grow, driven by strong sales in large home appliances (up 114% YoY), tablets, and wearables, with Xiaomi aiming for a Top 3 market share in major large home appliances by 2025 [5] - Projected revenue CAGR for Xiaomi IoT is 17% from 2024 to 2027 [5] Internet Services - Revenue from internet services grew 13% YoY to RMB9.1 billion, with stable GPM at 76.9%, primarily due to strong advertising performance [6] - Expected internet services revenue to reach RMB38 billion in 2025, supported by stable monthly active user growth [6] Valuation - 2025/26E EPS estimates were slightly increased due to more optimistic IoT margin forecasts [7] - Xiaomi is positioned as a top BUY with a target price of HK$75.25, based on a sum-of-the-parts valuation combining 21x 2026E P/E for traditional business and 4x 2026E P/S for the EV business [7]