Zhi Tong Cai Jing·2025-11-12 03:27Core Insights - Xiaomi Group's electric vehicle momentum exceeds expectations, with Q3 deliveries reaching approximately 110,000 units, and the business may turn profitable [1] - Despite delays in the approval of the second factory in Beijing, Q4 delivery volumes are expected to rise further due to healthy demand and the launch of a new large SUV in the coming year [1] - The company anticipates a 23% increase in electric vehicle shipments by 2027, with an expected net profit margin of 4.5% in the second half of 2027 [1] Financial Adjustments - The investment bank has revised its operating profit forecasts for Xiaomi's core business down by 2% and 1% for 2026 and 2027, respectively, while maintaining a "neutral" rating and lowering the target price from HKD 60 to HKD 50 [1] - The decline in core business profitability is more severe than previously anticipated, attributed to slowing growth in the domestic smartphone market, a pullback in IoT demand after a peak, and rising component costs impacting gross margins [1] - Core profitability is expected to remain under pressure for the next two to three quarters, with significant year-on-year growth likely not resuming until the second half of next year [1]