XIAOMI(HK:01810) SPDB International·2025-03-20 11:05Investment Rating - The report maintains a "Buy" rating for the company and raises the target price to HKD 75.0, indicating a potential upside of 29% from the current price of HKD 58.20 [1][5][29] Core Insights - The company achieved record high revenues and adjusted net profits in Q4 2024, with revenues reaching RMB 109 billion, adjusted net profits at RMB 8.3 billion, and core business net profits at RMB 9 billion, reflecting strong growth [1][14] - The company's strategic direction and management execution are highlighted as key factors for its robust performance, with significant growth expected in its smartphone, electric vehicle, and IoT segments [1][2] - The report expresses optimism about the company's long-term value growth, supported by its ecosystem strategy and leadership positions in various business segments [1][2] Financial Performance and Forecast - Revenue projections for the company are set to grow from RMB 270.97 billion in 2023 to RMB 705.62 billion by 2027, with a compound annual growth rate (CAGR) of 19% [4][15] - Adjusted net profit is expected to increase from RMB 19.27 billion in 2023 to RMB 59.14 billion in 2027, reflecting a strong growth trajectory [4][15] - The report anticipates a significant improvement in gross margins across various segments, particularly in smartphones and IoT products, driven by cost reductions and strategic initiatives [2][15] Segment Analysis - Smartphone segment: Expected shipment volume to exceed 180 million units in 2025, with improved gross margins due to cost reductions and high-end product strategies [2][15] - IoT segment: Anticipated revenue growth exceeding 20%, driven by large appliance sales and international expansion [2][15] - Internet services: Projected to maintain stable revenue growth and high gross margins due to a growing user base [2][15] - Electric vehicle segment: Targeting sales of 350,000 units, with expectations for steady margin improvements [2][15] Valuation - The report employs a sum-of-the-parts valuation method, assigning target price-to-earnings 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] - The current price reflects a price-to-earnings ratio of 42.1x, suggesting room for valuation expansion given the company's growth prospects [1][2]