Xiaomi Corp. (1810.HK) Conference Call Summary Company Overview - **Company**: Xiaomi Corp. (1810.HK) - **Market Cap**: HK$1.1 trillion / $144.0 billion - **Enterprise Value**: HK$921.6 billion / $118.6 billion - **Current Price**: HK$43.20 - **Target Price**: HK$56.50 (implying 30.8% upside) [1][5] Key Industry Insights - **Smartphone Market**: Expected to face near-term speed bumps but favorable risk-reward on a 12-month basis [1] - **AIoT (Artificial Intelligence of Things)**: Projected revenue growth of 6% in 3Q25 and 9% in 2026, with sequential growth accelerating [10][51] - **EV (Electric Vehicle)**: Anticipated first-time IFRS net profit of Rmb0.7 billion in 3Q25, driven by higher operating leverage [16] Financial Projections - **Revenue Forecasts**: - 2024: Rmb365.9 billion - 2025E: Rmb465.3 billion - 2026E: Rmb595.1 billion - 2027E: Rmb710.8 billion [5][13] - **EBITDA**: - 2024: Rmb30.8 billion - 2025E: Rmb55.3 billion - 2026E: Rmb62.6 billion - 2027E: Rmb79.4 billion [5][13] - **EPS (Earnings Per Share)**: - 2024: Rmb1.07 - 2025E: Rmb1.57 - 2026E: Rmb1.91 - 2027E: Rmb2.38 [5][13] Margin and Profitability - **Gross Profit Margin (GPM)**: Expected to decline to ~10% in 2026E due to rising memory costs, compared to ~11% in 2H25E [10][19] - **Net Profit Resilience**: Core net profit expected to remain flat year-over-year in 2026E, supported by increased contributions from AIoT and internet services [10][19] Competitive Landscape - **Market Position**: Xiaomi's comparative advantages expected to strengthen against peers due to larger scale and ecosystem [10][19] - **Smartphone Contribution**: Smartphone gross profit contribution is projected to decrease to 24% of total gross profit by 2026E [47] Challenges and Risks - **Memory Cost Pressure**: Anticipated challenges in mass model shipments due to rising memory costs, with a significant impact on pricing strategies [30][32] - **Inventory Management**: Longer inventory days observed, which may affect gross profit margins [21][26] Upcoming Events to Monitor - **Singles' Day GMV**: Key indicator of consumer demand and sales performance [17] - **3Q25 Results**: Scheduled for late November, expected to provide insights into revenue and profit growth [17] - **EV Manufacturing Capacity**: Progress on ramping up manufacturing capacity and new model launches [17][18] Summary of Key Metrics - **P/E Ratio**: 16.6 for 2024, increasing to 25.3 in 2025E [11] - **CROCI (Cash Return on Capital Invested)**: Expected to be 21.7% in 2024, declining to 29.8% by 2027E [11] - **Free Cash Flow Yield**: 7.2% in 2024, decreasing to 2.4% in 2026E [11] Conclusion - **Investment Outlook**: Despite short-term challenges, the long-term risk-reward profile for Xiaomi remains favorable, with a target price indicating significant upside potential [1][5]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Memory Semiconductor Industry, specifically focusing on DRAM and NAND markets - **Key Players**: Samsung Electronics (SEC), SK Hynix, U.S. and Chinese Cloud Service Providers (CSPs) Core Insights and Arguments DRAM Pricing Trends - **Conventional DRAM**: - Pricing increased by 10-15% quarter-over-quarter (qoq) in 3Q25 - Expected to rise by 8-13% qoq in 4Q25, driven by strong server demand and supply constraints [1][9] - **PC DRAM**: - Pricing rose by 8-13% qoq in 3Q25 - Anticipated increase of 3-8% qoq in 4Q25 due to higher server DRAM allocation constraining supply [3][9] - **Server DRAM**: - Pricing rose by 3-8% qoq in 3Q25 - Expected to increase by 5-10% qoq in 4Q25, with significant demand growth from U.S. (>25% yoy) and Chinese CSPs (>20% yoy) [4][9] NAND Pricing Trends - **NAND ASP**: - Increased by 3-8% qoq in 3Q25 - Projected stronger growth of 5-10% qoq in 4Q25, primarily due to robust demand for eSSD [2][10] Low-Power DRAM - Demand for low-power DRAM is rising due to increased DRAM content in smartphones and other applications - Pricing for LPDDR4/LPDDR5 rose by 10-15% and 38-43% qoq in 3Q25, with expectations of further increases in 4Q25 [5][8] Additional Important Insights - **Market Dynamics**: - Supply tightness in the memory market is expected to continue, influencing pricing strategies and inventory management among OEMs [3][4] - **Long-term Agreements**: - Discussions on long-term agreements for server DRAM pricing have begun, indicating a proactive approach to manage future demand and supply [4] - **Pricing Premiums**: - DDR5 16Gb spot pricing is trading at a 24% premium compared to contract prices, while DDR4 8Gb is at a 5% premium [11][13] Risks and Considerations - **Key Risks**: - Major deterioration in memory supply/demand dynamics - Sharp contraction in smartphone margins - Potential loss of market share in mobile OLED [20][23] Valuation and Ratings - **Samsung Electronics**: - Target price for common shares set at W96,000 and W78,000 for preference shares, rated as "Buy" [19] - **SK Hynix**: - Target price set at W300,000, rated as "Neutral" [22] This summary encapsulates the essential insights and trends discussed in the conference call, providing a comprehensive overview of the current state and future expectations of the memory semiconductor industry.