2024-07-23 03:01Investment Rating - The report assigns a "Buy" rating to Xiaomi Group, with a target price of HKD 21.1 per share, indicating a potential upside of 27.7% from the current price [2][59]. Core Insights - The global smartphone industry is showing signs of recovery, with demand gradually stabilizing and AI applications expected to drive growth [5][20]. - Xiaomi's brand strength is increasing, with smartphone shipments expected to outpace industry growth, achieving a global market share of 14.1% in Q1 2024, a year-on-year increase of 33.8% [6][34]. - The Xiaomi SU7 electric vehicle has seen strong demand, with over 30,000 units delivered, contributing positively to the company's overall sales ecosystem [7][53]. - The company is expected to achieve significant revenue growth in the coming years, with projected revenues of CNY 341.6 billion in 2024, representing a 26.1% increase [8][56]. Summary by Sections Company Overview - Xiaomi Group, established in April 2010 and listed on the Hong Kong Stock Exchange in July 2018, focuses on smartphones, smart hardware, and IoT platforms, aiming to provide high-quality products at reasonable prices [15]. Global Smartphone Demand Recovery - The global smartphone market is recovering, with Q4 2023 showing an 8% year-on-year growth, and Q1 2024 experiencing a 10% increase in shipments [20][22]. - The demand for smartphone upgrades is rising due to aging devices, with the replacement cycle extending beyond three years [17]. AI Mobile Phones as a Growth Driver - 2024 is anticipated to be the year of AI mobile phones, with a projected penetration rate of 16% for AI-enabled smartphones [26]. - Major smartphone manufacturers, including Xiaomi, are investing in AI capabilities, with a focus on integrating AI models directly into devices [24][25]. Xiaomi's Market Position and Strategy - Xiaomi's smartphone shipments reached 40.8 million units in Q1 2024, with significant growth in various regions, including the Middle East and Latin America [34][37]. - The company is enhancing its high-end product offerings, with a 21.7% share of high-end smartphone shipments in Q1 2024 [38]. Financial Projections and Valuation - Revenue forecasts for Xiaomi from 2024 to 2026 are CNY 341.6 billion, CNY 385.2 billion, and CNY 437.5 billion, respectively, with corresponding net profits of CNY 161.96 billion, CNY 180.52 billion, and CNY 207.28 billion [8][56]. - The company is expected to maintain a healthy growth trajectory, supported by its investments in the automotive sector and AI technologies [56].