Financial Performance - Xiaomi Group reported total revenue of RMB 1090 million for Q1 2025, representing a year-over-year increase of 30.5% [1] - Gross profit for the same period was RMB 232 million, with a gross margin of 21.4%, which is a 0.05% beat compared to expectations [1] - Net income reached RMB 109 million, showing a significant year-over-year growth of 160.8% [1] R&D and Strategic Initiatives - The company plans to invest over RMB 200 billion in R&D from 2026 to 2030, following a cumulative investment of over RMB 102 billion from 2021 to 2025 [2][3] - Xiaomi's chip team has been re-established since 2019, with a total investment exceeding RMB 13.5 billion and a team size of over 2,500 people [4] - As of March 31, 2025, the R&D personnel reached a historical high of 21,731 [4] Product and Market Strategy - Xiaomi's high-end strategy has led to an increase in global smartphone ASP to RMB 1211, with a 25% market share in the high-end segment in mainland China [13] - The flagship model, Xiaomi 15 Ultra, saw a sales increase of over 90% in its first month compared to the previous generation [13] - The company expanded its offline presence by adding over 1,000 Xiaomi Home stores, bringing the total to nearly 16,000 [13] Smart EV and IoT Business - In Q1 2025, Xiaomi delivered 76,000 smart electric vehicles (EVs), with plans for a second-phase factory to enhance vertical integration capabilities [13] - The IoT business continues to grow rapidly, with the company focusing on optimizing production capacity and maintaining product consistency [6][7]

Investment Rating - The report rates the electronic industry as "Outperform the Market" [1][3]. Core Insights - The report highlights that AI has become the main innovation direction for electronic terminal devices, with emerging products like smart glasses and robots gaining prominence. Continuous product launches in the AI application layer are expected to drive demand for related terminal products [3][23]. - The report notes that the traditional AI computing power supply chain is facing challenges from new open-source forces, leading to a new cycle of declining AI computing costs, which will benefit application-layer industries directly [3][23]. - The report anticipates a new wave of upgrades in servers, smartphones, and intelligent driving systems, alongside a sustained increase in demand for domestic computing power chips [3][23]. Summary by Sections 1. MWC 2025 Focus on AI and 5G-A Technology Innovation - The MWC 2025 showcased global leading technology companies and innovations, focusing on AI integration, 5.5G-A technology development, and AI terminal device trends [6][10]. 2. Global Industry Dynamics - OpenAI launched a new set of API and agent development tools to simplify AI agent development, enhancing capabilities for information retrieval and task execution [22][23]. - Samsung is accelerating the development of glass substrates, aiming for mass production by 2027, which is expected to reduce semiconductor manufacturing costs and enhance chip performance [24][25]. - ASML and Imec have signed a new five-year strategic cooperation agreement to advance semiconductor technology, focusing on high-end node chip development [26][27]. - Meta is testing its first self-developed AI training chip based on the RISC-V architecture, with plans for mass deployment in 2026, aiming to reduce reliance on external suppliers [28][29]. 3. Market Review - The electronic industry experienced a decline of 0.6% this week, ranking 29th out of 31 sectors, while the SW electronic sub-sectors showed varied performances, with printed circuit boards leading at +8.6% [31][34].

Group 1: Lithium Battery - The lithium battery index increased by 1.31%, outperforming the Shanghai and Shenzhen 300 index which decreased by 2.22% [2][18] - The macro policy encourages the development of the new energy vehicle industry, with significant sales growth in January 2025 [18] - Short-term investment opportunities are suggested based on industry prosperity and market trends [18] Group 2: Chemical Industry - The CITIC basic chemical industry index fell by 0.27%, while the Shanghai and Shenzhen 300 index fell by 2.22%, indicating better performance than the benchmark [3][21] - 26 sub-industries within the chemical sector increased, with modified plastics and electronic chemicals leading the gains [21] - Investment focus is recommended on potassium fertilizer, polyester filament, and organic silicon industries due to their growth potential [21][24] Group 3: New Materials - The new materials index decreased by 0.46%, slightly outperforming the Shanghai and Shenzhen 300 index [4][26] - New materials are supported by national policies as a strategic emerging industry, with growth driven by advancements in commercial aerospace and robotics [26][27] - Investment suggestions include thermal barrier coatings and rare earth permanent magnet materials [27] Group 4: Light Industry Manufacturing - The light industry manufacturing index rose by 0.38%, outperforming the Shanghai and Shenzhen 300 index by 2.60 percentage points [5][29] - The paper industry is expected to benefit from rising prices of imported pulp and government policies to stimulate consumption [29][31] - The home furnishing sector is showing signs of recovery, with potential growth driven by promotional activities [29][31] Group 5: Agriculture, Forestry, Animal Husbandry, and Fishery - The agriculture, forestry, animal husbandry, and fishery index fell by 0.91%, but still outperformed the Shanghai and Shenzhen 300 index by 1.31 percentage points [6][34] - The pig farming sector is expected to see improved profitability in 2024 due to reduced supply and cost pressures [37] - Investment focus is suggested on the pig farming and pet food sectors as they approach performance turning points [34][37] Group 6: Securities - The securities index fell by 2.97%, underperforming the Shanghai and Shenzhen 300 index by 0.75 percentage points [9][42] - Despite recent declines, the securities sector is expected to enter a new upward cycle, with average valuations remaining below historical levels [42][43] - Continuous attention to the securities sector is recommended as it maintains a structural market [42] Group 7: Machinery - The CS machinery sector decreased by 1.84%, outperforming the Shanghai and Shenzhen 300 index by 0.38 percentage points [10][44] - Investment suggestions include traditional engineering machinery and high-speed rail equipment due to stable fundamentals [44][48] - The sector is experiencing adjustments in AI and robotics themes, indicating potential volatility [48] Group 8: Photovoltaics - The photovoltaic industry rose by 1.01%, outperforming the Shanghai and Shenzhen 300 index [11][50] - The sector is experiencing significant transaction volume, with expectations for continued growth in global photovoltaic installations [50][51] - Investment focus is recommended on leading companies in the photovoltaic supply chain, particularly in polysilicon and module manufacturing [51] Group 9: Power and Utilities - The power and utilities index fell by 1.03%, outperforming the Shanghai and Shenzhen 300 index by 1.19 percentage points [12] - The sector is poised for growth due to increasing electricity demand from new energy systems and market reforms [12] - Investment suggestions include large hydro and nuclear power companies with strong dividend yields [12] Group 10: Media - The media sector fell by 8.06%, significantly underperforming the Shanghai and Shenzhen 300 index [13] - The impact of AI on the media industry is highlighted, with potential for growth in gaming and content creation [13][14] - Long-term investment focus is suggested on gaming companies benefiting from AI integration [14]

Investment Rating - The report maintains a "Recommended" rating for Xiaomi Group [4] Core Viewpoints - The launch of the Xiaomi 15 Ultra and Xiaomi SU7 Ultra showcases the company's expansion into multiple sectors, including smartphones, computers, smart home devices, and automobiles [1][2] - The Xiaomi SU7 Ultra has achieved significant sales, with 248,000 orders locked in and 135,000 delivered within nine months of its launch [2] - The company is leveraging its user base and supply chain advantages to drive long-term growth, particularly through its high-end smartphone strategy, expanding AIOT product matrix, and automotive business [3] Summary by Sections Smartphone Segment - The Xiaomi 15 Ultra starts at 6,499 RMB, maintaining the price of its predecessor, but future Ultra products are expected to see price increases. Key innovations include a Leica ultra-pure optical system and a 6,000mAh battery, marking it as the strongest Ultra model in terms of battery life [1] AIOT Products - The AIOT lineup includes the REDMI Book Pro 16 2025, Xiaomi Buds 5 Pro, and Xiaomi Smart Speaker Pro, with features such as the Xiaomi AIPC engine and high-quality audio transmission [2] Automotive Business - The Xiaomi SU7 Ultra is priced at 529,900 RMB, significantly lower than the previously indicated price of 814,900 RMB. The model aims to establish itself as a new luxury vehicle for the current era, achieving over 10,000 pre-orders within two hours of launch [2] Smart Driving Technology - Xiaomi's end-to-end smart driving technology was fully rolled out on February 25, with a total computing power of 10.68 EFLOPS and over 10 million learning clips. The company aims to be a leader in smart driving by 2025 [3] Financial Projections - Revenue projections for 2024, 2025, and 2026 are 366.26 billion RMB, 502.75 billion RMB, and 620.86 billion RMB, respectively, with corresponding net profits of 21.82 billion RMB, 29.49 billion RMB, and 39.44 billion RMB. The expected P/E ratios are 54, 40, and 30 [3][6]