Core Viewpoint - The article discusses the recent legal victory of Xiaomi against a counterfeit brand "Xiaomi Zero Degree," highlighting the ongoing battle against trademark infringement and the prevalence of counterfeit products in the market [4][14][48]. Group 1: Legal Case Overview - Xiaomi sued "Xiaomi Zero Degree" for trademark infringement and unfair competition, resulting in a court ruling that awarded Xiaomi 30 million yuan in damages [4][14]. - The counterfeit brand generated 1.3 billion yuan in sales over two years by misleading consumers with a similar name and logo, as well as a confusing voice command [10][30]. - The court recognized the similarity in voice commands as a form of consumer confusion, which is protected under the Anti-Unfair Competition Law [13][14]. Group 2: Broader Implications of Counterfeiting - The case reflects a larger trend of counterfeit products in the consumer market, where brands often face challenges from imitators [19][20]. - Other notable cases include a 50 million yuan penalty against a manufacturer using the "Xiaomi Life" trademark and a 30 million yuan penalty for a company named "Shenzhen Xiaomi Trading Co." [17]. - The article emphasizes that the counterfeit phenomenon is widespread, affecting various industries, including household products and food [26][32]. Group 3: Economic Impact of Counterfeiting - Counterfeit products often have significantly lower production costs, leading to high profit margins for counterfeiters, which incentivizes their continued existence in the market [32][33]. - Despite legal victories, the ongoing battle against counterfeiting is costly and time-consuming for legitimate brands, as they must continuously invest in legal actions to protect their trademarks [43][47]. - The article suggests that while counterfeiting may never be completely eradicated, strong brand identity and product quality can serve as effective defenses against imitation [48][49].

Investment Rating - The report maintains a "Buy" rating for Xiaomi Group [11][13]. Core Insights - The "Self-Pleasing" new consumption concept supports the successful launch of the SU7, with the YU7 expected to replicate this success. Xiaomi is accelerating its layout of extended-range models, entering a strong product cycle, and is expected to achieve rapid sales of one million vehicles. Based on Xiaomi's steady growth trend in high-end penetration in its smartphone and IoT businesses, as well as the rapid ramp-up of its automotive segment, the projected net profit attributable to shareholders for 2025, 2026, and 2027 is estimated to be 35.404 billion, 51.653 billion, and 65.531 billion yuan respectively [4][11]. Summary by Sections SU7 Initial Success and YU7 Potential - The 200,000 to 300,000 yuan price segment for cars is continuously expanding, with the SU7 positioned accurately and establishing a mid-to-high-end brand tone, achieving an average monthly sales of 23,000 units since its launch. The YU7 is expected to target a larger market and leverage its comprehensive strengths to potentially become another bestseller [7][34]. Xiaomi's Methodology and Automotive Success - Xiaomi's success in the smartphone and IoT sectors has led to the development of a unique "User + Product + Technology + Efficiency" methodology. This includes a large fan base, self-developed motor and control technology, supply chain management to reduce production costs, and a focus on creating blockbuster products [8][9]. Strong Model Cycle and Sales Projections - The high-end market is expanding, with significant opportunities for domestic alternatives in the electric and intelligent vehicle sectors. The projected sales for the high-end passenger car market (priced above 200,000 yuan) in 2024 is 9.443 million units, a year-on-year increase of 4.8%. The CAGR for high-end market sales from 2020 to 2024 is 14.6%, with domestic brands expected to capture a growing market share [9][10]. Brand Synergy and Ecosystem Integration - The launch of the SU7 not only marks the realization of Xiaomi's car manufacturing plans but also extends its "Smartphone + AIoT" ecosystem strategy into the automotive sector. The interconnected ecosystem enhances user stickiness and drives revenue growth across other product lines, with the lifetime value of automotive users exceeding 230,000 yuan [10][11]. Investment Recommendations - The report emphasizes the potential for Xiaomi to replicate Tesla's profitability rhythm, with expectations for the automotive segment to turn profitable by 2025, and a projected net profit per vehicle exceeding 10,000 yuan [9][10].