Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 75.52 HKD based on a 38x PE valuation for 2026 [3][10]. Core Insights - The company achieved record high revenue and adjusted net profit in Q1 2025, with revenue reaching 111.3 billion CNY, a 47% year-on-year increase, and adjusted net profit of 10.7 billion CNY, up 64% year-on-year [9]. - The smartphone segment showed significant growth, with a 9% increase in revenue to 50.6 billion CNY and a global market share of 14.1%, ranking among the top three globally [9]. - The IoT and lifestyle products segment also saw strong performance, with revenue of 32.3 billion CNY, a 59% increase, and a gross margin of 25.2% [9]. - The internet services segment reported revenue of 9.1 billion CNY, a 13% increase, with a gross margin of 76.9% [9]. - The electric vehicle segment generated 18.6 billion CNY in revenue, with a gross margin of 23.2%, and the company continues to expand its sales network [9]. Financial Summary - Revenue projections for 2025-2027 are 477.67 billion CNY, 575.30 billion CNY, and 690.22 billion CNY, respectively, with year-on-year growth rates of 31%, 20%, and 20% [5][10]. - Adjusted net profit forecasts for the same period are 35.12 billion CNY, 47.32 billion CNY, and 59.00 billion CNY, with growth rates of 48%, 35%, and 25% [5][10]. - The company’s gross margin is expected to improve from 22.5% in 2025 to 23.1% in 2027, while net profit margin is projected to increase from 7.4% to 8.5% [5][10]. - The earnings per share (EPS) forecast for 2025-2027 is 1.35 CNY, 1.82 CNY, and 2.27 CNY, respectively [5][10].

Investment Rating - The report maintains a "Buy" rating for Xiaomi Group with a target price of 75.52 HKD, based on a 38x PE valuation for comparable companies in 2026 [3][10]. Core Insights - The company achieved record high revenue and adjusted net profit in Q1 2025, with revenue reaching 111.3 billion CNY, a 47% year-on-year increase, and adjusted net profit of 10.7 billion CNY, up 64% year-on-year [9]. - Xiaomi's smartphone shipments increased, with a market share of 14.1% globally, ranking among the top three, and a significant return to the top position in China's market with a share of 18.8% [9]. - The IoT and lifestyle products segment also saw strong growth, with revenue of 32.3 billion CNY, a 59% increase year-on-year, and a gross margin of 25.2% [9]. - The internet services segment reported revenue of 9.1 billion CNY, a 13% increase year-on-year, with a gross margin of 76.9% [9]. - The electric vehicle segment generated 18.6 billion CNY in revenue, with a gross margin of 23.2%, and the company continues to expand its sales network [9]. Financial Summary - Revenue projections for 2025-2027 are 477.67 billion CNY, 575.30 billion CNY, and 690.22 billion CNY, respectively, with year-on-year growth rates of 31%, 20%, and 20% [5]. - Adjusted net profit forecasts for the same period are 35.12 billion CNY, 47.32 billion CNY, and 59.00 billion CNY, with growth rates of 48%, 35%, and 25% [5]. - The earnings per share (EPS) estimates for 2025-2027 are 1.35 CNY, 1.82 CNY, and 2.27 CNY, respectively [5][10]. - The gross margin is expected to improve from 22.5% in 2025 to 23.1% in 2027, while the net margin is projected to increase from 7.4% to 8.5% over the same period [5].

Investment Rating - The industry investment rating is "Positive" [2] Core Viewpoints - The report highlights that the semiconductor industry is experiencing a downturn, with various segments showing negative year-to-date performance, particularly consumer electronics which has declined by 11.12% [2][8] - Xiaomi has launched its first self-developed flagship processor "Xuanjie O1," which utilizes a second-generation 3nm process, featuring a 10-core CPU and a 16-core GPU, with a transistor count of 19 billion and a chip area of 109mm² [2][29][30] - The report emphasizes Xiaomi's significant investment in chip development, with over 13.5 billion yuan invested to date and an expected investment of over 6 billion yuan this year, as part of a long-term plan to invest at least 50 billion yuan over the next decade [31] - The introduction of the Xuanjie O1 positions Xiaomi as the fourth company globally to mass-produce 3nm SoC chips, indicating a shift in the global mobile SoC chip landscape and enhancing the competitiveness of domestic SoC chips [31] Summary by Sections Industry Performance - The report notes a decline in the Shenwan Electronics Index, with specific segments like semiconductors down by 0.66% year-to-date and consumer electronics down by 11.12% [2][8] - In the past week, major North American tech stocks also saw declines, with Apple down by 7.57% and Tesla down by 3.04% [2][11] Xiaomi's Processor Launch - Xiaomi's Xuanjie O1 processor features advanced architecture with two Arm Cortex-X925 super-large cores, four A725 performance cores, and two A520 ultra-efficient cores [30][31] - The report suggests that Xiaomi's entry into the 3nm SoC market could disrupt the existing market dynamics and enhance the global competitiveness of Chinese semiconductor firms [31] Investment Opportunities - The report recommends monitoring companies involved in computing power chains such as Industrial Fulian, Shennan Circuit, and others, as well as domestic computing power firms like Cambrian and Haiguang Information [2]

Market Overview - The A-share market experienced a decline on Thursday, with the Shanghai Composite Index falling by 0.22% to close at 3,380.19 points, the Shenzhen Component Index down by 0.72%, and the ChiNext Index decreasing by 0.96%. The total trading volume in the A-share market was 1.10 trillion RMB, with over 4,200 stocks declining. Only the banking, media, and household appliance sectors saw gains, while the beauty care and social services sectors led the losses. Concept sectors such as mobile gaming and terahertz technology performed well, while epoxy propylene and graphite electrode concepts faced significant declines. In the Hong Kong market, the Hang Seng Index dropped by 1.19%, and the Hang Seng Tech Index fell by 1.70%. Internationally, the U.S. stock indices showed mixed results, with the Dow Jones remaining flat, the S&P 500 down by 0.04%, and the Nasdaq up by 0.28%. European and Asia-Pacific markets also experienced declines [2][6]. Important News - The tax reduction bill proposed by U.S. President Trump passed the House of Representatives with a narrow margin on May 22. The bill aims to reduce taxes by over 4 trillion USD over the next decade and cut at least 1.5 trillion USD in spending. It will also raise the U.S. debt ceiling by 4 trillion USD, which is lower than the 5 trillion USD sought by the Senate [3][7]. - Xiaomi held its 15th-anniversary strategic product launch on May 22, unveiling three new products equipped with its self-developed Xuanjie chip: the Xiaomi 15S Pro, Xiaomi Pad 7 Ultra, and Xiaomi Watch S4 15th Anniversary Edition. The highly anticipated Xiaomi YU7, the company's first SUV, was also officially launched, positioned as a "luxury high-performance SUV" with features like laser radar and extended battery life, set to be released in July. Xiaomi's founder Lei Jun stated that the company has committed to chip development for at least 10 years with an investment of over 50 billion RMB, and plans to invest an additional 200 billion RMB in core technology research and development over the next five years [3][7].

Core Viewpoint - Xiaomi has launched its new electric SUV, the YU7, during its 15th anniversary event, showcasing advanced design and technology features aimed at expanding its automotive market presence [2][53]. Design and Aesthetics - The YU7 features a unique design inspired by luxury cars, with a focus on proportions such as a 3:1 wheelbase ratio and a 1.3:1 head-to-body ratio, contributing to its aesthetic appeal [6][8]. - The vehicle is available in multiple colors, including a gem-inspired green and a futuristic titanium color, achieved through advanced painting techniques [4][10]. - The design has drawn comparisons to the Ferrari Purosangue, highlighting its distinctive proportions and luxury appeal [10][12]. Technological Innovations - The YU7 incorporates a "sky screen" projection technology that enhances the driving experience by displaying information directly in the driver's line of sight, with a peak brightness of 1200 nits [32][36]. - The vehicle features over 40 aerodynamic optimizations, resulting in a reduced drag coefficient of 0.245Cd and an extended range of 836 km for the standard version [20][48]. Performance Specifications - The YU7 is offered in three versions: a standard rear-wheel drive, a dual-motor all-wheel drive Pro version, and a Max version, with power outputs ranging from 235 kW (320 hp) to 508 kW (690 hp) [46][49]. - The vehicle is equipped with a large 96.3 kWh battery, enabling it to achieve significant ranges, making it a leader in the mid-to-large electric SUV segment [48]. Market Positioning and Future Plans - The launch of the YU7 is a strategic move for Xiaomi to solidify its brand presence in the competitive SUV market, following the success of its previous model, the SU7, which sold 28,000 units [53][55]. - Xiaomi plans to expand its product lineup with a range of vehicles, including a potential entry into the budget segment with a range-extended SUV expected by 2026 [55][57].

Core Insights - The report highlights the performance of the Hong Kong stock market, with the Hang Seng Index closing at 23,332.72, down 0.05% after a three-day decline totaling 1.3% [2][3] - The report notes that the industrial value-added data from mainland China exceeded expectations, which helped to mitigate the market's decline [3] - The report emphasizes the strong performance of certain stocks, such as Meituan and Tencent, which rose by 2.3% and 1.2% respectively, while Geely saw a decline of 2.5% [3] Macro & Industry Dynamics - Hong Kong's Chief Executive, John Lee, stated that Hong Kong serves as a financial hub amidst rising unilateralism and protectionism, aiming to strengthen its role as a mediator for international trade [6] - The Financial Secretary, Paul Chan, reported that Hong Kong's stock market has seen significant inflows, with new stock fundraising activities leading the world, accumulating over 60 billion this year, a sixfold increase year-on-year [7] - The Chinese Ministry of Industry and Information Technology has issued guidelines to promote the development of the technology service industry, focusing on creating a unified technology trading service platform [9] Company News - Xiaomi is set to unveil its first SUV model, YU7, and a self-developed chip, "玄戒 O1," at a strategic product launch event [11] - Jianbei Miao Miao expects a profit increase of at least 50% for the fiscal year ending March, driven by effective brand management and strong sales performance in its core product segments [12] - CLP Holdings reported a 2.6% year-on-year decrease in electricity sales in Hong Kong for the first quarter, attributed to warmer weather and a reduction in overall electricity demand [13]