Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **global tyre industry**, particularly the competitive landscape and investment opportunities within the sector [1][2][3][4]. Core Insights - **Positive Outlook for Tier 1 Tyremakers**: The analysis is bullish on Tier 1 tyre manufacturers, highlighting their high margins and discounted valuations, predicting prosperity over the next decade [2][3]. - **Michelin as Top Pick**: Michelin is identified as the top investment pick with an expected upside of **28%** [2][4]. - **High EBIT Margins**: The tyre industry generates high EBIT margins (~**15%**) that are expected to expand over time, with a majority of revenue coming from the aftermarket rather than OEMs [3][4]. - **Premiumisation**: The trend of premiumisation is crucial for growth, with significant returns on innovation and R&D investments noted. The increasing penetration of EVs, SUVs, and luxury cars is expected to drive positive mix shifts [3][4]. Competitive Landscape - **Market Stability**: Despite the rise of low-cost Chinese competitors, Tier 1 companies maintain approximately **50%** of the market share in value terms, indicating stability in their market position [14]. - **Product Innovation**: Tier 1 companies have successfully limited price competition through product innovation, focusing on quality segments where consumers are willing to pay a premium [5][14]. - **Regional Dynamics**: Michelin is noted to have a larger presence in North America compared to Europe, while Bridgestone has a stronger focus on the APAC region [33]. Financial Metrics - **Revenue and Growth**: The global tyre industry is valued at approximately **$200 billion**, with year-to-year revenue fluctuations largely driven by raw material prices [11]. - **Cash Generation**: Tyre companies convert **40-60%** of annual EBITDA into free cash flow, positioning the sector favorably compared to other industrial sectors [80]. - **Valuation Multiples**: Michelin and Bridgestone are valued at higher multiples due to their strong margins and growth potential, while Pirelli and Continental are rated as Market-Perform due to governance and valuation concerns [8][10]. Investment Implications - **Stock Ratings**: Michelin and Bridgestone are rated as Outperform, while Continental and Pirelli are rated as Market-Perform [8][10]. - **Capital Allocation**: Michelin has balanced its cash use between M&A, deleveraging, and increasing capital returns through dividends and buybacks, indicating a strong capital allocation strategy [88]. Risks and Challenges - **Competitive Threats**: Potential risks include increased competition from low-cost Chinese manufacturers and the impact of economic downturns on premium tyre markets [114][116]. - **Market Dynamics**: The cyclical nature of the Truck & Bus market poses challenges, with lower margins compared to other segments [75][79]. Conclusion - The global tyre industry presents significant investment opportunities, particularly in Tier 1 manufacturers like Michelin and Bridgestone, driven by premiumisation and innovation. However, investors should remain cautious of competitive threats and market volatility.

Core Viewpoint - Xiaomi reported strong 1Q25 results with revenue and adjusted net income increasing by 47% and 65% YoY to RMB111 billion and RMB11 billion respectively, surpassing consensus estimates [1][2] Financial Performance - Revenue reached RMB111 billion, a 47% YoY increase, with improved gross profit margin (GPM) at 22.8%, up 2.2 percentage points QoQ, beating consensus by 2% [2] - Adjusted net income of RMB10.7 billion exceeded estimates by 10% and 18% [2] - Operating profit margin (OPM) improved by 3.6 percentage points QoQ to 9%, indicating effective operational expense leverage [2] Smart EV Business - Smart EV revenue rose by 11.5% QoQ to RMB18.6 billion, with GPM expanding 2.7 percentage points QoQ to 23.2%, driven by a favorable sales mix and improved scale effects [3] - Adjusted net loss for the EV segment decreased to RMB195 million from RMB730 million in 4Q24, reflecting better GPM and strict OPEX control [3] Smartphone Segment - Smartphone revenue reached RMB51 billion, a 9% YoY increase, supported by a 3% rise in shipments to 42 million and a 6% increase in average selling price (ASP) to RMB1,211 [4] - GPM for smartphones improved to 12.4%, with expectations for further increases due to a higher premium product mix and lower component costs [4] IoT Segment - IoT revenue and GPM continued to grow, driven by strong sales in large home appliances (up 114% YoY), tablets, and wearables, with Xiaomi aiming for a Top 3 market share in major large home appliances by 2025 [5] - Projected revenue CAGR for Xiaomi IoT is 17% from 2024 to 2027 [5] Internet Services - Revenue from internet services grew 13% YoY to RMB9.1 billion, with stable GPM at 76.9%, primarily due to strong advertising performance [6] - Expected internet services revenue to reach RMB38 billion in 2025, supported by stable monthly active user growth [6] Valuation - 2025/26E EPS estimates were slightly increased due to more optimistic IoT margin forecasts [7] - Xiaomi is positioned as a top BUY with a target price of HK$75.25, based on a sum-of-the-parts valuation combining 21x 2026E P/E for traditional business and 4x 2026E P/S for the EV business [7]