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]