Ge Long Hui·2025-10-28 19:30Core Insights - The automotive delivery volume is steadily increasing, indicating potential profitability at the operational level [1] - The smartphone gross margin is expected to be under pressure due to rising storage costs, with hopes that the high-end shift of the Xiaomi 17 series will mitigate this impact in Q4 [2] Financial Projections - Adjusted revenue forecasts for Xiaomi Group (1810.HK) for FY2025E-FY2027E are set at RMB 482.3 billion, 634.7 billion, and 750.6 billion respectively, down from previous estimates of RMB 489.1 billion, 641.8 billion, and 758.4 billion [1] - Adjusted net profit forecasts are revised to RMB 43.6 billion, 67.9 billion, and 83.3 billion for the same period, compared to prior estimates of RMB 45.4 billion, 68.1 billion, and 83.6 billion [1] - The target price for Xiaomi Group is adjusted to HKD 65.7, maintaining a "Buy" rating [1] Automotive Sector Performance - The automotive delivery volume is expected to reach approximately 109,000 units in Q3, with an anticipated increase in average selling price (ASP) due to the ramp-up of Yu7 deliveries, leading to an estimated automotive sales revenue of around RMB 29.2 billion [1] - Xiaomi's automotive division is projected to achieve operational profitability in Q3 due to scale effects and cost reduction measures [1] Smartphone Market Dynamics - In Q3 2025, global smartphone shipments increased by 2.6% year-on-year, with Xiaomi's shipments rising by 1.8% to 43.5 million units, capturing a market share of 13.5%, a slight decline of 0.1 percentage points year-on-year [2] - In the Chinese market, Xiaomi's smartphone shipments decreased by 1.7% to 10 million units in Q3 2025 [2] - The smartphone gross margin is expected to decline by 0.5 percentage points to 11% in Q3 due to the impact of rising storage costs and a decrease in sales proportion from the Chinese market [2] IOT and Internet Revenue - IOT revenue is projected to grow by 6% year-on-year to RMB 27.7 billion in Q3, although it is expected to decline quarter-on-quarter due to seasonal factors and subsidy reductions [2] - The IOT gross margin is anticipated to increase by 0.5 percentage points to 23% [2] - Internet revenue is expected to rise by 7.7% year-on-year, maintaining a gross margin of 75.4% quarter-on-quarter [2]