XIAOMI(HK:01810)2025-03-20 09:41Investment Rating - The report maintains a "Buy" rating for Xiaomi Group with a target price of HKD 75.0, indicating a potential upside of 29% from the current price of HKD 58.20 [1][5][29] Core Insights - Xiaomi achieved record high revenue and adjusted net profit in Q4 2024, with revenue reaching RMB 109 billion, adjusted net profit at RMB 8.3 billion, and core business net profit at RMB 9 billion, reflecting strong growth and effective management strategies [1][14] - The company's ecosystem strategy, including its automotive and IoT segments, is expected to provide long-term growth opportunities, positioning Xiaomi for leadership in both domestic and global markets [1][2] - The report highlights Xiaomi's competitive valuation, with a current P/E ratio of 42.1x, suggesting room for further appreciation given its growth prospects in electric vehicles and AI [1][2] Financial Performance and Forecast - Revenue projections for Xiaomi are set to grow from RMB 270.97 billion in 2023 to RMB 705.62 billion by 2027, with a CAGR of 19% [4][15] - Adjusted net profit is expected to increase significantly from RMB 19.27 billion in 2023 to RMB 59.14 billion in 2027, reflecting a robust growth trajectory [4][15] - The report anticipates a steady improvement in gross margins across various segments, particularly in IoT and electric vehicles, contributing to overall profitability [2][15] Segment Analysis - Smartphone segment is projected to ship over 180 million units in 2025, benefiting from cost reductions and a high-end product strategy [2] - IoT revenue is expected to grow over 20%, driven by large appliances and international expansion [2] - Internet services are forecasted to maintain stable revenue growth due to an increasing user base and improved service structure [2] - The electric vehicle segment aims for sales of 350,000 units, with expectations for margin improvement through scale and premium models [2][15] Valuation Methodology - The report employs a sum-of-the-parts valuation approach, assigning target P/E ratios of 25.0x for smartphones, 30.0x for IoT, and 25.0x for internet services, leading to a target price of HKD 75.0 [2][16]