Core Viewpoint - Goldman Sachs' market team identifies Xiaomi as a consensus short/sell target in the short term due to a lack of catalysts and various operational challenges [1][5][9] Group 1: Market Sentiment and Short Selling - Hedge funds have increased their short positions on Xiaomi by 53% in the past week, indicating a shift in investor sentiment towards caution ahead of the upcoming Q3 earnings report [3][9] - The overall selling pressure is dominated by pension funds and hedge funds, reflecting a bearish outlook on Xiaomi's stock [3][9] Group 2: Financial Performance and Forecasts - Goldman Sachs has lowered Xiaomi's 12-month target price from HKD 66 to HKD 56.5, a decrease of over 10%, citing rising storage chip prices, slowing AIoT growth, and delays in electric vehicle factory construction as key reasons [5][19] - The report predicts that Xiaomi's smartphone gross margin will decline to approximately 10% by 2026, with a cautious forecast of 1.73 million units shipped, reflecting only a 1% year-on-year growth [13][20] Group 3: AIoT and Electric Vehicle Business - AIoT growth is expected to slow down significantly, with projected revenue growth rates of 6% and 0% in Q3 and Q4 of 2025, respectively, primarily due to high base effects in the Chinese market [14] - Xiaomi's electric vehicle business is seen as a core growth story, with expected deliveries of 390,000 units in 2025 and 800,000 units in 2026, despite the financial impact of vehicle purchase subsidies [16][17] Group 4: Long-term Outlook and Valuation - Despite the challenges, Goldman Sachs maintains a "buy" rating on Xiaomi, highlighting the attractive risk-reward profile at current stock prices [21] - The long-term valuation model has been updated, with a bull case price of HKD 67.4, representing a 56% upside, and a bear case price of HKD 39.0, indicating a 10% downside [22]

Core Viewpoint - Hedge funds have significantly increased their short positions on Xiaomi, with a 53% surge in the past week, indicating a cautious investor sentiment ahead of the company's Q3 earnings report on November 18 [1][5] Group 1: Hedge Fund Activity - Hedge funds view Xiaomi as a consensus short/sell target in the short term due to a lack of catalysts [1][5] - The selling pressure has been dominated by pension funds and hedge funds, reflecting a strong bearish sentiment [5] Group 2: Financial Performance and Forecasts - Goldman Sachs has lowered Xiaomi's 12-month target price from HKD 66 to HKD 56.5, a decline of over 10% [1][11] - The downgrade is attributed to rising storage chip prices affecting gross margins, slowing growth in AIoT business, and delivery risks from delays in the electric vehicle factory [1][11] - Market expectations for Xiaomi's Q3 revenue growth are set at 23% year-on-year [1] Group 3: Smartphone Business and Margins - Rising storage costs are expected to pressure Xiaomi's smartphone gross margins, which are projected to decline to around 10% by 2026 [6] - Despite the margin pressure, Xiaomi's high-end strategy and favorable currency adjustments may mitigate some of the impacts [6] Group 4: AIoT Business Growth - AIoT revenue growth is anticipated to slow down due to high base effects, with expected growth rates of 6% and 0% in Q3 and Q4 of 2025, respectively [8] - However, international market expansion could provide new growth opportunities, with plans to open approximately 2,000 Xiaomi stores by 2026 [8] Group 5: Electric Vehicle Business - The electric vehicle segment is crucial for Xiaomi's future growth, with a projected financial impact of around RMB 3 billion from vehicle purchase subsidies in the first half of 2026 [9] - Production capacity is expected to gradually increase, with delivery forecasts remaining stable at 390,000 vehicles in 2025 and 800,000 in 2026 [10] Group 6: Long-term Outlook - Despite the challenges, Goldman Sachs maintains a "buy" rating, citing attractive risk-reward dynamics at current stock prices [12] - The company is also investing in new areas such as AI language models and robotics, which could serve as potential catalysts for stock price appreciation [12]