Core Viewpoint - Guosheng Securities has given Xiaomi Group-W (01810) a target price of HKD 52 and reiterated a "Buy" rating, citing strong Q3 performance with a 22.3% year-on-year revenue growth to CNY 113.1 billion and a record adjusted net profit of CNY 11.3 billion, up 80.9% year-on-year, driven by the high-end smartphone strategy and automotive business [1][2]. Financial Performance - In Q3 2025, Xiaomi Group achieved revenue of CNY 113.1 billion, a 22.3% increase year-on-year. Revenue breakdown includes approximately CNY 46 billion from smartphones, CNY 27.6 billion from IoT, CNY 9.4 billion from internet services, and CNY 29 billion from automotive and AI businesses. The adjusted net profit reached CNY 11.3 billion, marking a historical high with an 80.9% year-on-year growth [2]. Business Aspects - **Smartphones**: Xiaomi continues to push for high-end market penetration, with global smartphone shipments reaching 43.3 million units, a 0.5% year-on-year increase. The company holds approximately 13.6% of the global market share, ranking in the top three, and 16.7% in mainland China, ranking second. High-end smartphone sales in mainland China accounted for 24.1% of total sales, with a market share of 18.9% in the CNY 4,000-6,000 price range. The Xiaomi 17 series, particularly the Pro and Pro Max models, accounted for over 80% of sales, indicating an optimized product structure [3]. - **IoT**: Xiaomi's AIoT platform has surpassed 1 billion connected devices, reflecting a 20.2% year-on-year growth. The company ranks first in global shipments of wearable wristbands and second in TWS earphones. The launch of a smart home appliance factory in October 2025 marks a significant step in closing the design, R&D, production, and validation loop for its major appliance business [3]. Automotive and AI Innovation - Xiaomi's automotive and AI innovation business achieved its first quarterly profit, with approximately 109,000 vehicles delivered, setting a new record. The Xiaomi YU7 series ranked first in the SUV sales chart in mainland China in October 2025, with operating income from this segment reaching approximately CNY 700 million [4]. Profit Forecast and Rating - Guosheng Securities anticipates that Xiaomi Group will maintain relative competitiveness in the face of short-term industry disruptions, given its leading market share and successful high-end strategy. The company projects revenues of CNY 470 billion, CNY 557 billion, and CNY 694 billion for 2025-2027, with non-GAAP net profits of approximately CNY 44 billion, CNY 50.1 billion, and CNY 65 billion respectively. The target price of HKD 52 is based on a 20x P/E for the consumer electronics segment and a 2.5x P/S for the automotive and AI innovation business, reaffirming the "Buy" rating [5].

Core Insights - The report from the Chinese Academy of Social Sciences indicates that by the end of 2024, the market size for online literature reading in China will reach 43.06 billion, with a year-on-year growth of 6.8% [1] - The online literature IP market is projected to significantly increase to 298.56 billion, reflecting a year-on-year growth of 14.6% [1] - The report highlights key trends in the online literature industry, including the classicization of works, multi-modal collaborative development of IP, and ongoing globalization [1] Market Size and Growth - By the end of 2024, the number of online literature authors will exceed 30 million, reaching 31.198 million, with the total number of works at 41.651 million and users at 575 million, marking a 10.58% year-on-year increase [1] - The report notes that over half of Chinese internet users are actively engaged in reading online literature [1] IP Development and Economic Impact - The "Guzi economy" is rapidly developing in 2024, driven by the accumulation of online literature and its downstream applications in anime and gaming [2] - The GMV of derivative products from online literature has surpassed 500 million, with card products alone exceeding 200 million [2] - The collaborative effect of multi-channel and integrated development signifies a shift in the head IP industry from literary content output to a more mature cultural industry model [2] Globalization and Digital Expansion - The globalization of Chinese online literature has entered a new phase characterized by "global reading, global creation, and global development," supported by AI translation and cross-border collaboration [2] - In 2024, the total number of digital reading works exported from China is expected to reach 808,400, with a year-on-year growth of 6.03% [2] - The overseas market for online literature is projected to exceed 5 billion, with 460,000 overseas authors and over 350 million users across more than 200 countries, particularly noting a 180% increase in the Japanese market [2] Industry Trends - The report discusses new industry trends such as AI-assisted creation, the premiumization of short dramas, and collaborative IP creation [3] - AI is recognized as a powerful tool for enhancing writers' creative efficiency, presenting both opportunities and challenges [3] - The trend towards high-quality short dramas and collaborative IP development is emerging as a new direction for the industry [3]