Core Viewpoint - Xiaomi has demonstrated remarkable growth in the second quarter, achieving record highs in revenue and adjusted net profit despite a challenging smartphone market, indicating a significant transformation in the company's business model and strategy [1][2][4]. Financial Performance - In Q2, Xiaomi's total revenue reached 1160 billion, a year-on-year increase of 30.5%, while net profit was 119 billion, up 134.2%. Adjusted net profit was 108 billion, reflecting a 75.4% increase [5]. - Xiaomi has achieved three consecutive quarters of revenue exceeding 100 billion and five consecutive quarters of revenue growth over 30% [5][9]. Strategic Initiatives - The "Human-Vehicle-Home Ecosystem" strategy has enhanced Xiaomi's resilience and internal growth momentum, contributing to its strong financial performance [5][9]. - Xiaomi's smartphone business has solidified its position in the high-end market, with a 27.6% share of high-end smartphone sales in mainland China, an increase of 5.5 percentage points year-on-year [5][6]. Product Performance - The IoT and consumer products segment saw a 44.7% year-on-year revenue growth, driven by smart home appliances, with air conditioning sales exceeding 5.4 million units, a growth of over 60% [6][11]. - The automotive sector reported a staggering 230.3% year-on-year increase in revenue, reaching 206 billion, with a gross margin of 26.4%, surpassing leading brands like Tesla [6][9]. Future Outlook - Xiaomi aims to enter the "2 million club" within three to five years, positioning itself alongside Apple and Samsung [6]. - The company plans to invest 300 billion in R&D this year, with a total of 1020 billion invested over the past five years, focusing on core technologies [11][13]. - Xiaomi is preparing to expand its automotive business into overseas markets, with a target to enter Europe by 2027 [15]. Market Perception - Analysts view Xiaomi's explosive growth in the electric vehicle sector as a potential catalyst for stock price increases, with Morgan Stanley maintaining an "overweight" rating and a target price of 62 HKD, indicating significant upside potential [15].

Core Viewpoint - Xiaomi Group reported record high core indicators in Q2, with revenue reaching 116 billion yuan, a year-on-year increase of 30.5%, and adjusted net profit of 10.8 billion yuan, up 75.4% year-on-year [1] Group 1: Financial Performance - Revenue for Q2 was 116 billion yuan, marking a 30.5% year-on-year growth, continuing a trend of exceeding 100 billion yuan for three consecutive quarters [1] - Adjusted net profit reached 10.8 billion yuan, a significant increase of 75.4% year-on-year, with two consecutive quarters surpassing 10 billion yuan [1] Group 2: Automotive and AI Innovations - Revenue from the smart electric vehicle and AI innovation segment exceeded 20 billion yuan, indicating a shift towards scalable growth [2] - In Q2, Xiaomi delivered 81,302 vehicles, with total deliveries surpassing 300,000 by July 10, and over 15.7 million vehicles delivered in the first half of the year [2] - The operating loss for the automotive business narrowed significantly to 300 million yuan, with expectations of profitability in the second half of the year [2] Group 3: Smartphone and IoT Performance - Xiaomi's smartphone revenue reached 45.5 billion yuan, with a continuous positive growth in shipments for eight consecutive quarters, maintaining a top-three global position for 20 quarters [2][3] - IoT and lifestyle product revenue hit 38.7 billion yuan, a year-on-year increase of 44.7%, with smart home appliances seeing a 66.2% increase [2][4] - Internet service revenue grew to 9.1 billion yuan, reflecting a 10.1% year-on-year increase [2] Group 4: Market Position and User Engagement - Despite a challenging global smartphone market, Xiaomi achieved a market share of 16.8% in China, ranking first domestically with 11.5 million new device activations in Q2 [3] - Xiaomi's global monthly active users reached 731 million, with 185 million in mainland China, and the number of connected IoT devices reached 989 million [5] Group 5: High-End Strategy and R&D Investment - Xiaomi's high-end smartphone market share increased to 27.6%, with significant growth in the 4,000-5,000 yuan and 5,000-6,000 yuan price segments [6] - R&D investment reached 7.8 billion yuan in Q2, a 41.2% year-on-year increase, with an expected total investment of 30 billion yuan for the year [7] - The launch of the self-developed 3nm flagship chip and AI glasses indicates Xiaomi's commitment to innovation and technology advancement [7]

Core Insights - Xiaomi Group reported record high core indicators in Q2, with revenue reaching 116 billion yuan, a year-on-year increase of 30.5%, marking the third consecutive quarter of exceeding 100 billion yuan [1] - Adjusted net profit for the quarter was 10.8 billion yuan, a significant year-on-year increase of 75.4%, continuing the trend of surpassing 10 billion yuan for two consecutive quarters [1] Revenue Breakdown - Revenue from the smart electric vehicle and AI innovation business exceeded 20 billion yuan, indicating a shift towards scalable growth [2] - Xiaomi's automotive deliveries reached 81,302 units in Q2, with cumulative deliveries surpassing 300,000 units by July 10, and a monthly delivery of over 30,000 units for the first time in July [2] - The smartphone and AIoT segment generated revenue of 94.7 billion yuan, a year-on-year increase of 14.8%, with smartphone revenue at 45.5 billion yuan and IoT and consumer products revenue at 38.7 billion yuan, up 44.7% [2] Market Position - Despite a challenging global smartphone market, Xiaomi's smartphone business achieved growth, with 11.5 million new device activations in Q2, maintaining a 16.8% market share in China, ranking first domestically [3] - Internationally, Xiaomi's smartphone shipments have seen year-on-year growth for eight consecutive quarters, ranking in the top three in 60 countries and regions [3] IoT and Home Appliances - The IoT and consumer products segment continued to grow, with smart home appliance revenue increasing by 66.2% [4] - In Q2, Xiaomi's air conditioning product shipments exceeded 5.4 million units, with a growth rate of over 60%, while refrigerator and washing machine shipments also saw significant increases [4] Strategic Developments - Xiaomi's internet service revenue grew steadily, with global monthly active users reaching 731 million and IoT devices connected to the AIoT platform reaching 989 million [5] - The company is focusing on high-end market positioning, with high-end smartphone sales accounting for 27.6% of total sales in China, a year-on-year increase of 5.5 percentage points [5] - The launch of the YU7 SUV, priced from 253,500 yuan, saw significant initial demand, with over 240,000 orders within 18 hours [5] R&D and Innovation - Xiaomi's R&D investment reached 7.8 billion yuan in Q2, a year-on-year increase of 41.2%, with an expected total investment of 30 billion yuan for the year [6] - The company launched its self-developed 3nm flagship chip, becoming the first in mainland China to do so, with new high-end devices featuring this chip released in Q2 [7] - The launch of AI glasses exceeded expectations, with a high approval rating on e-commerce platforms and ongoing efforts to ramp up production [7]

Group 1 - Xiaomi recently launched the MIX Flip 2 foldable phone, which is powered by the Snapdragon 8 Gen 2 processor instead of the self-developed玄戒O1 chip, with a starting price of 5999 yuan [1] - Xiaomi's official response to the absence of the玄戒O1 chip in the MIX Flip 2 indicated that the chip was primarily for technical validation and the initial production plan was limited, unable to meet the mass production needs of the foldable product [1] - The玄戒O1 chip is currently only used in a few products, including the Xiaomi 15S Pro and Xiaomi Pad 7 series [1] Group 2 - In Q2 2025, Xiaomi (including REDMI) achieved an activation volume of 11.42 million units, leading the Chinese smartphone market with a market share of 16.63%, representing a year-on-year growth of 7.39% [3] - Vivo (including iQOO) followed closely with an activation volume of 11.24 million units and a market share of 16.37%, but experienced a year-on-year decline of 5.95% [3] - OPPO (including OnePlus and realme) ranked third with 11.17 million units activated and a market share of 16.27%, showing a year-on-year growth rate of 10.48% [3] - Huawei and Apple ranked fourth and fifth, respectively, with activation volumes of 11.04 million and 11.04 million units, both holding a market share of 16.08%, with year-on-year growth rates of 10.96% and 8.46% [3] - There are reports of progress in Xiaomi's next-generation self-developed baseband, but uncertainty remains regarding whether the玄戒O2 will utilize the self-developed baseband [3]

Investment Rating - The report maintains a "Buy" rating for Xiaomi Group [4][23]. Core Viewpoints - Xiaomi has launched its self-developed "Xuanjie O1" chip, enhancing its "Human-Vehicle-Home" ecosystem. The company plans to invest an additional 200 billion yuan in core technology research and development from 2026 to 2030 [2][21]. - The company is expected to see significant growth in revenue and net profit, with projections of 309.48 billion yuan, 400.08 billion yuan, and 501.72 billion yuan in net profit for 2025, 2026, and 2027 respectively [23]. Summary by Relevant Sections Financial Indicators - Revenue (million yuan): 270,970.14 in 2023, projected to reach 673,424.43 by 2027, with a CAGR of 16.89% [1]. - Net profit (million yuan): 17,475.17 in 2023, expected to grow to 50,172.45 by 2027, reflecting a growth rate of 25.40% [1]. - ROE: Expected to increase from 10.66% in 2023 to 16.19% in 2027 [1]. - EPS: Projected to rise from 0.67 yuan in 2023 to 1.93 yuan in 2027 [1]. Product Launches and Innovations - The "Xuanjie O1" chip is a significant milestone, utilizing a second-generation 3nm process and featuring a 10-core CPU and a 16-core GPU [11][12]. - The Xiaomi 15S Pro, Xiaomi Pad 7 Ultra, and Xiaomi Watch S4 were launched, all equipped with the new chip, showcasing advancements in technology and design [2][11]. - The high-performance SUV, Xiaomi YU7, was introduced, featuring impressive specifications such as a maximum horsepower of 690PS and a 0-100 km/h acceleration time of just 3.23 seconds [3][21]. Market Position and Strategy - Xiaomi's smartphone business remains strong, consistently ranking among the top three globally for 19 consecutive quarters. The company is also expanding into the electric vehicle market, which is expected to provide a second growth curve [17][23]. - The report emphasizes the importance of maintaining high R&D investments, totaling 1,020 billion yuan over the past five years, to support product upgrades across its ecosystem [17][21].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 67.9, indicating a potential upside of 29.28% from the current price of HKD 52.50 [6][10]. Core Insights - The company reported revenue of RMB 111.3 billion for Q1 2025, a year-on-year increase of 47.4%, surpassing market expectations of RMB 109 billion. The overall gross margin improved to 22.8%, up 0.5 percentage points year-on-year. Net profit reached RMB 10.9 billion, a significant year-on-year increase of 161.0%, with adjusted net profit at RMB 10.7 billion, up 64.5%, exceeding market expectations of RMB 9.1 billion [2]. - The company aims to invest RMB 200 billion in R&D from 2026 to 2030 to strengthen its technological moat, with a focus on AI and chip technology, expecting to invest RMB 7.5 billion in AI this year [2]. - The smartphone segment saw revenue of RMB 50.6 billion, a year-on-year increase of 8.9%, with a market share of 18.8%, marking a return to the top position in domestic smartphone shipments after ten years. The average selling price (ASP) of smartphones increased by 5.8% to RMB 1,211 [3]. - The Internet of Things (IoT) segment experienced explosive growth, with revenue increasing by 58.7% to RMB 32.3 billion, and a gross margin of 25.2%, up 5.4 percentage points year-on-year [4]. - The automotive business reported revenue of RMB 18.6 billion, with a gross margin of 23.2%, and a significant reduction in operating losses, with the new luxury SUV model YU7 receiving positive market feedback [5]. Financial Summary - The company’s projected revenues for 2025, 2026, and 2027 are RMB 495.6 billion, RMB 627.0 billion, and RMB 721.4 billion, respectively. Adjusted net profits are expected to be RMB 45.6 billion, RMB 57.8 billion, and RMB 70.2 billion for the same years [6][7]. - The gross margin is projected to improve from 21.21% in 2023 to 23.33% by 2027, reflecting enhanced operational efficiency and product mix [13]. - The company’s earnings per share (EPS) is forecasted to grow significantly from RMB 0.69 in 2023 to RMB 2.61 in 2027, indicating a robust growth trajectory [7][13].

Core Insights - Xiaomi reported its strongest quarterly earnings in history during the Q1 2025 earnings call, with a commitment to invest 200 billion yuan in R&D from 2026 to 2030, focusing on hard technology as a competitive advantage [2][3] - The company aims to enhance its position in the high-end smartphone market and expand its automotive business, despite facing challenges in brand perception and profitability [2][4] R&D Investment Strategy - Xiaomi plans to invest 300 billion yuan in R&D by 2025, totaling over 1,020 billion yuan from 2021 to 2025 [2] - The new five-year plan (2026-2030) includes a projected R&D investment of 200 billion yuan, emphasizing the importance of AI and chip technology [3][5] Market Position and Challenges - Xiaomi holds a strong position in the mid-to-low-end smartphone market but struggles to penetrate the high-end segment, where it faces stiff competition from Apple and Samsung [2][4] - The automotive sector is still in its early growth phase, with challenges related to production capacity and profitability, particularly in the context of low margins and high R&D costs [2][4] Global Expansion and Ecosystem Development - The company aims to leverage its experiences in China to expand globally, focusing on emerging markets like Southeast Asia and Latin America, while also targeting mature markets in Europe and the Middle East [4] - Xiaomi is working on creating a unified ecosystem that integrates smartphones, home appliances, and vehicles to enhance user engagement and ecosystem value [4] AI and Chip Development - Xiaomi is advancing its AI capabilities with the release of the Xiaomi MiMo model, which has shown strong performance in mathematical reasoning and coding competitions [5] - The company launched its first self-developed 3nm flagship smartphone SoC, the Xiaomi玄戒O1, which features 19 billion transistors and is positioned among the top tier in the industry [5][6] Long-term Commitment to Chip Development - Since restarting its chip project in 2021, Xiaomi has committed to a long-term investment plan of at least 500 billion yuan over ten years, with over 135 billion yuan already invested in the chip department [6] - The chip R&D team has grown to over 2,500 members, making it one of the largest in China, with a focus on maintaining strategic patience and continuous investment [6]

Core Insights - Xiaomi Group has reported record-breaking quarterly net profits, with significant growth in revenue and adjusted net profit for Q1 2025 [5][6][7] Financial Performance - In Q1 2025, Xiaomi's revenue increased by 47.4% year-on-year to 111.3 billion RMB, while adjusted net profit reached 10.7 billion RMB, marking a 64.5% increase [6][8] - The company has achieved three consecutive quarters of sequential growth in adjusted net profit since Q3 2024 [7] Market Position - Xiaomi ranks third in quarterly profit among Hong Kong-listed internet companies, following Tencent and Alibaba [8] - The company's stock price has seen significant increases, with a 121% rise in 2024 and over 50% increase year-to-date in 2025 [10][11] Institutional Investment - Public funds have increased their holdings in Xiaomi, with a total of 49.31 million shares added in Q1 2025, bringing the total market value of holdings to 43.1 billion RMB [12] Business Segments - Revenue from the mobile and AIoT segment reached 92.7 billion RMB, a 22.8% increase, while the smart electric vehicle and AI segment generated 18.6 billion RMB [13] - Xiaomi's smart home appliances saw a remarkable revenue growth of 113.8% in Q1 2025, with significant increases in unit sales for air conditioners, refrigerators, and washing machines [16] R&D and Innovation - Xiaomi's R&D expenditure in Q1 2025 was 6.7 billion RMB, a 30.1% increase, with a record number of R&D personnel [16] - The company plans to invest 200 billion RMB in R&D over the next five years, focusing on product differentiation and technology development [17]

Core Viewpoint - Xiaomi Group's Q1 2025 performance shows significant growth, with revenue increasing by 47.4% year-on-year to 111.3 billion yuan and adjusted net profit surpassing 10.7 billion yuan, a 64.5% increase year-on-year [2][4]. Financial Performance - Xiaomi Group's adjusted net profit has been on a continuous rise for three consecutive quarters, with Q1 2025 setting a new record [4]. - The core business revenue from mobile and IoT reached 92.7 billion yuan, a 22.8% increase year-on-year, with mobile revenue at 50.6 billion yuan (up 8.9%) and IoT revenue at 32.3 billion yuan (up 58.7%) [4]. - Major home appliance sales saw significant growth, with air conditioner shipments exceeding 1.1 million units (up over 65%), refrigerators over 880,000 units (up over 65%), and washing machines over 740,000 units (up over 100%) [4]. Automotive and Innovation Business - Revenue from smart electric vehicles and AI innovation reached 18.6 billion yuan, with approximately 75,900 units of the Xiaomi SU7 series delivered in Q1 2025, totaling over 258,000 units delivered by May 21, 2025 [4][8]. - Xiaomi aims to deliver 350,000 vehicles in 2025, indicating a strong focus on the automotive sector [8]. Market Position and Valuation - Xiaomi Group's stock price has seen significant increases, with a 121% rise in 2022, and a 49.42% increase in 2023 despite recent market fluctuations [7][8]. - The company has a rolling P/E ratio of 52.4, making it the highest valued among companies with a market cap exceeding 1 trillion HKD [7]. Research and Development Investment - In Q1 2025, Xiaomi invested 6.7 billion yuan in R&D, a 30.1% increase year-on-year, with plans to reach 30 billion yuan in total R&D investment for the year [8]. - The company announced a commitment to invest 200 billion yuan in R&D over the next five years, aiming to become a leader in core technology [8]. Fund Management and Market Sentiment - Public funds have increased their holdings in Xiaomi Group, with a total of 49.31 million shares added in Q1, bringing the total market value of holdings to 43.1 billion yuan [11]. - Xiaomi ranks third in market value among Hong Kong stocks, following Tencent and Alibaba, indicating strong institutional interest [11].

Investment Rating - Industry investment rating is "Overweight," indicating that the industry index is expected to outperform the market by more than 5% in the next six months [40]. Core Insights - The report highlights a strategic plan for 2025, targeting revenue growth of over 30% and an anticipated R&D investment of 30 billion yuan, with a guidance of 200 billion yuan for R&D from 2026 to 2030 [1]. - Xiaomi's recent product launch on May 22 showcased a comprehensive ecosystem with the introduction of the玄戒 O1 3nm flagship chip, which features a transistor count of 19 billion and a performance score exceeding 3 million on AnTuTu [3][4]. - The new products include the Xiaomi 15S Pro, Xiaomi Pad 7 Ultra, and the first electric SUV, YU7, which is set to launch in July [3]. - The YU7 SUV offers three power configurations, with a maximum power of 508 kW and a range of up to 835 km, showcasing advanced technology and luxury features [3][20]. Summary by Sections Strategic Planning - The company aims for a revenue growth target of over 30% in 2025 and plans to invest 30 billion yuan in R&D for the same year, with a total of 200 billion yuan planned for the following five years [1]. Product Launch - The launch event introduced several key products, including: - Xiaomi 15S Pro with the玄戒 O1 chip, priced at 5499 yuan for the 16GB+512GB version [3]. - Xiaomi Pad 7 Ultra, the first OLED tablet from Xiaomi, priced at 5699 yuan for the 12GB+256GB version [3]. - Xiaomi Watch S4 eSIM, priced at 1299 yuan, featuring 4G connectivity [3]. - The YU7 electric SUV, with a starting price expected to be no less than 300,000 yuan [3]. Performance Metrics - The玄戒 O1 chip features a "2+4+2+2" ten-core architecture, achieving top-tier performance and efficiency, with a GPU that dynamically adjusts power consumption [3][10]. - The first quarter of 2025 saw significant growth in Xiaomi's home appliance sales, with air conditioning sales up 102.7%, refrigerators up 144.9%, and washing machines up 184.4% [3][19].