Core Viewpoint - Weak demand for smartphones is expected to lead to disappointing Q2 performance for Xiaomi Group-W (01810), prompting a target price reduction from HKD 73 to HKD 69.85 while maintaining a "Buy" rating [1] Smartphone Industry Summary - Third-party data and industry surveys indicate weak global smartphone demand in Q2 2025, with only the U.S. market showing some pre-demand [1] - High inventory levels for Android devices, particularly in emerging markets such as Southeast Asia and India [1] - Xiaomi's smartphone revenue forecast for Q2 2025 has been lowered by approximately 5%, with gross margin expectations reduced by 0.5% to 11.8% [1] - A more pessimistic outlook on global smartphone demand and competitive landscape has led to a slight downward adjustment of long-term gross margin predictions for smartphones to below 12% [1] Electric Vehicle Segment Summary - Xiaomi's electric vehicle deliveries are progressing well, with gross margins improving due to a better product mix [1] - Q2 delivery volume is maintained at 81,000 units, with gross margin expected to rise to 23.9% quarter-on-quarter, primarily due to an increased share of SU7 Ultra model deliveries [1] - Management has indicated that the second electric vehicle factory has not yet commenced commercial production, but once operational, it will significantly boost capacity [1] - Investor sentiment towards the Chinese automotive sector has become more cautious due to lower-than-expected demand for new models from other local brands [1] - Despite this, the waiting time for SU7 and YU7 models remains long, reinforcing confidence in long-term bullish forecasts for Xiaomi's electric vehicle segment [1]

Group 1 - The core viewpoint of the report indicates that Xiaomi Group's Q2 performance may fall short of expectations due to weak smartphone demand, leading to a target price adjustment from HKD 73 to HKD 69.85 while maintaining a "Buy" rating [1] - Third-party data and industry surveys suggest that global smartphone demand will be weak in Q2 2025, with high inventory levels for Android devices, particularly in emerging markets like Southeast Asia and India [1] - Xiaomi's smartphone revenue forecast for Q2 2025 has been reduced by approximately 5%, and the gross margin forecast has been lowered by 0.5% to 11.8% due to a more pessimistic outlook on global smartphone demand and competition [1] Group 2 - The report highlights that Xiaomi's electric vehicle (EV) deliveries are progressing well, with gross margins improving due to a better product mix, maintaining a Q2 delivery volume of 81,000 units and a gross margin increase to 23.9% driven by a higher proportion of SU7 Ultra model deliveries [1] - Management has indicated that the second EV factory has not yet commenced commercial production, but once operational, it will significantly enhance capacity [1] - Investor sentiment towards the Chinese automotive industry has become more cautious due to lower-than-expected demand for new models from other local brands, yet the long waiting times for the SU7 and YU7 models bolster confidence in long-term forecasts [1]

Group 1 - Jefferies report indicates that Xiaomi's Q2 performance may fall short of expectations due to weak smartphone demand, lowering the target price from HKD 73 to HKD 69.85 while maintaining a "Buy" rating [1] - Third-party data and industry surveys suggest a weak global smartphone demand in Q2 2025, with high inventory levels for Android devices, particularly in emerging markets like Southeast Asia and India [1] - Xiaomi's smartphone revenue forecast for Q2 2025 has been reduced by approximately 5%, and gross margin forecast has been lowered by 0.5% to 11.8%, reflecting a more pessimistic view on global smartphone demand and competitive landscape [1] Group 2 - Xiaomi's electric vehicle (EV) deliveries are progressing well, with gross margins improving due to a better product mix, maintaining a delivery volume of 81,000 units for Q2, and gross margin expected to rise to 23.9% due to an increased share of SU7 Ultra model deliveries [1] - Management has indicated that the second EV factory has not yet commenced commercial production, but once operational, it will significantly enhance capacity [1] - Investor sentiment towards the Chinese automotive industry has become more cautious due to lower-than-expected demand for new models from other local brands, yet the waiting time for SU7 and YU7 models remains long, bolstering confidence in long-term forecasts [1]

Group 1 - Xiaomi Group's stock price fell by 5%, reaching a two-month intraday low before narrowing the decline [1] - Jefferies reported that weak smartphone demand and high inventory may pressure the company's Q2 performance, slightly lowering the target price to HKD 69.85 [3] - The average selling price growth of Xiaomi's flagship smartphones in China significantly slowed down in Q2 compared to Q1, according to Jefferies' tracking data [3]