KAIYUAN SECURITIES·2024-08-22 14:39Investment Rating - The investment rating for Xiaomi Group-W (01810.HK) is maintained as "Buy" [2][3] Core Views - The sustained upward momentum in the automotive sector, along with the high-end and export strategies, is expected to enhance the long-term outlook for the company [3] - Adjusted net profit estimates for 2024-2026 have been raised from 20.3 billion, 22.7 billion, and 21.9 billion to 21.0 billion, 28.2 billion, and 33.3 billion respectively, reflecting year-on-year growth rates of 9%, 34%, and 18% [3] - The current stock price of HKD 19.1 corresponds to a PE ratio of 21.1, 15.7, and 13.3 for 2024-2026, indicating strong profitability and cash flow potential [3] Financial Performance Summary - In Q2 2024, the adjusted net profit reached 6.2 billion, a 20% year-on-year increase, driven by better-than-expected IoT revenue and automotive gross margins [4] - Smartphone revenue grew by 27% year-on-year, although gross margin decreased from 14.8% in Q1 2024 to 12.1% due to rising component costs [4] - IoT revenue increased by 20% year-on-year, supported by higher sales of major appliances, tablets, and wearables, with a stable gross margin of 19.7% [4] - Internet revenue rose by 11% year-on-year, with a gross margin of 78.3%, benefiting from improved advertising margins [4] - The automotive segment delivered 27,000 units in Q2 2024, generating revenue of 6.4 billion with a gross margin of 15% [4] Business Outlook - The smartphone business is expected to see a slight increase in shipments in H2 2024, with total shipments projected to approach 170 million units for the year [5] - The automotive business is anticipated to continue its upward trend in gross margins due to increased production capacity and higher-margin product offerings [5] - The launch of the Xiaomi 15 flagship model and the introduction of a second new vehicle in 2025 are expected to boost market confidence [3][5] Key Financial Metrics - Revenue for 2024 is projected at 349.769 billion, with a year-on-year growth of 29.1% [6] - Adjusted net profit for 2024 is estimated at 20.972 billion, reflecting an 8.8% year-on-year increase [6] - Gross margin is expected to be 20.9% in 2024, with net margin at 6.0% and ROE at 12.5% [6]