Ge Long Hui·2026-02-10 20:47Core Viewpoint - The rising prices of DRAM and NAND storage are expected to negatively impact global consumer electronics demand and brand gross margins, leading to a forecasted decline in Xiaomi's overall gross margin and net profit in Q4 2025 [1][2]. Business Segments Summary Automotive Business - In Q4 2025, Xiaomi's automotive revenue is projected to reach 37.2 billion RMB, representing a year-on-year increase of 123% and a quarter-on-quarter increase of 28% [1][3]. - The gross margin for the automotive segment is expected to be around 21.6%, influenced by a decrease in the delivery proportion of the SU7 Ultra model [3]. - For 2026, the company aims to deliver 650,000 vehicles, exceeding its target of 550,000 units, supported by new model launches [2][3]. Smartphone Business - Xiaomi's smartphone shipment is expected to decline to 37.8 million units in Q4 2025, a year-on-year decrease of 11.5% [1][4]. - The gross margin for smartphones is anticipated to drop by 2.6 percentage points to approximately 8.5% due to rising memory prices [1][4]. - For 2026, smartphone shipments are projected to decrease by 10% to 148 million units, but the average selling price (ASP) is expected to improve by about 5% due to product mix enhancements [4]. IoT and Internet Business - The IoT segment's revenue in Q4 2025 is estimated to be around 25.2 billion RMB, with a gross margin expected to remain high at 22.2% despite a year-on-year decline of 19% due to subsidy reductions [1][4]. - Internet business revenue is projected to grow by 2% to 9.5 billion RMB, maintaining a gross margin of 76.9% [1][4]. - For FY26, IoT revenue is expected to increase by 5% year-on-year to 130.5 billion RMB, driven mainly by overseas demand [4]. Financial Forecast and Valuation - The company has revised its revenue forecasts downward for 2025-2027 by 3.1%, 9.5%, and 11.5%, respectively, and has also reduced its Non-GAAP net profit estimates for the same period by 9.1%, 21.4%, and 19.4% [4]. - The target price has been adjusted to 47 HKD from 53.8 HKD, based on a sum-of-the-parts valuation method, corresponding to a 29 times PE for 2026 [2][4].