Haitong Securities·2024-10-12 02:12Investment Rating - The report assigns an "Outperform" rating to the company [5][8]. Core Insights - The company has shown significant growth in adjusted net profit and cash reserves, with a historical high cash reserve of 136.3 billion yuan as of 2023 [6][8]. - The gross margin has steadily improved, indicating a recovery in profitability, with a gross margin of 21.21% in 2023, up 4.22 percentage points year-on-year [6][8]. - The company is focusing on global market opportunities, with domestic and overseas revenues showing strong growth in the first half of 2024 [6][8]. - The automotive business is highlighted as a key area of growth, with the launch of the Xiaomi SU7 series electric vehicles [6][8]. Financial Performance Summary - In 2023, the company reported operating revenue of 271 billion yuan, a decrease of 3.2% year-on-year, but adjusted net profit increased by 126.3% to 19.3 billion yuan [6][8]. - For the first half of 2024, operating revenue reached 164.4 billion yuan, a year-on-year increase of 29.6%, with adjusted net profit rising by 51.3% to 12.7 billion yuan [6][8]. - The company expects revenue growth of 16% in 2024, with a projected operating revenue of 314.7 billion yuan [12][33]. Business Segment Analysis 1) Smartphone Business - The smartphone segment generated revenue of 93 billion yuan in the first half of 2024, reflecting a year-on-year increase of 29.9% [13][15]. - The company aims for gradual revenue recovery in this segment, with expected growth rates of 4.1% to 6.1% from 2024 to 2026 [13][15]. 2) IoT and Consumer Products - Revenue from IoT and consumer products reached a record high of 47.1 billion yuan in the first half of 2024, growing by 20.6% year-on-year [15][18]. - The segment is expected to see continued growth, with projected revenue increases of 13% to 14% from 2024 to 2026 [15][18]. 3) Internet Services - Internet services revenue reached 16.3 billion yuan in the first half of 2024, marking a 12.7% increase year-on-year [19][22]. - The segment is anticipated to maintain growth, with expected revenue increases of 3% to 4% from 2024 to 2026 [19][22]. 4) Automotive Business - The automotive segment generated 6.4 billion yuan in revenue in the second quarter of 2024, with expectations to deliver 120,000 vehicles by the end of the year [22][26]. - Revenue projections for the automotive business are set at 25.85 billion yuan for 2024, with significant growth anticipated in subsequent years [22][26]. Valuation and Market Outlook - The report estimates the company's total market value to be between 613.33 billion and 698.35 billion HKD, with a target price range of 24.58 to 27.98 HKD per share [8][33]. - The valuation is based on a combination of price-to-earnings (PE) and price-to-sales (PS) ratios for different business segments [8][33].