2024-08-27 04:00Investment Rating - The report maintains a "Buy" rating for Xiaomi Group (1810.HK) with a target price of HKD 23.6, indicating a potential upside of 26% from the current price of HKD 18.82 [5][8]. Core Insights - Xiaomi's two main business segments, smartphones and AIoT, along with its electric vehicle (EV) sector, are experiencing stable and strong growth trends. The smartphone segment continues to show good growth in both domestic and international markets, particularly in high-end smartphones, which supports IoT product growth and accumulates high-end user bases for its internet services [5]. - The EV segment has reported a gross margin of 15.4%, significantly exceeding market expectations, driven by delivery volume exceeding expectations, supplier support, and contributions from automotive peripheral products. Overall, Xiaomi's products in smartphones, EVs, and IoT are positioned for long-term growth potential [5]. Business Segment Summaries - Smartphones: Expected shipment volume for 2024 is projected to reach 166 million units. The smartphone gross margin is anticipated to bottom out in Q3 2023 due to rising upstream costs, with a recovery expected in Q4. Strategies focusing on high-end, globalization, and new retail are being effectively implemented [5]. - IoT: Multiple product categories, including major appliances, are showing strong growth, with gross margins expected to remain high. Xiaomi is expanding its IoT product categories through internal research and development strategies [5]. - Internet Services: This segment benefits directly from the growing user base of smartphones and IoT, particularly high-end users, leading to scale effects that are likely to maintain high gross margins [5]. - Electric Vehicles: The successful launch of the Xiaomi SU7 has laid a solid foundation for new models in the coming year. The EV segment's gross margin is expected to improve further in Q3 and Q4 2023 as delivery volumes continue to rise [5]. Financial Projections - Revenue for 2024 is projected at RMB 341.017 billion, with a year-on-year growth rate of 26%. Adjusted net profit is expected to be RMB 20.263 billion, reflecting a 5% increase year-on-year [7][14]. - The report provides a detailed financial forecast, indicating a steady increase in revenue and profit margins over the next few years, with significant growth expected in 2025 and 2026 [12][14].