Investment Rating - The report maintains a "Buy" rating for Xiaomi Group with a target price of HKD 53.8, down from HKD 65.4 [5][13]. Core Insights - Xiaomi's Q3 2025 performance showed a total revenue increase of 22% year-on-year to RMB 113.1 billion, aligning with expectations, while adjusted net profit surged by 80.9% to RMB 11.31 billion, exceeding Bloomberg consensus by 12.6% [1][5]. - The report highlights that the storage super cycle is a significant variable affecting Xiaomi's stock price and performance in 2026. Compared to other smartphone manufacturers, Xiaomi has advantages in smartphone shipment volume (third globally), high-end smartphone ratio, and a robust non-mobile business that is less impacted by storage costs [1][2]. - The report anticipates that storage price increases will affect Xiaomi's smartphone shipment volume, product pricing, and gross margins, leading to a downward revision of the 2026 smartphone shipment forecast to 165 million units from 182 million units, and gross margin to 10.7% from 12% [2][3]. Summary by Sections Smartphone/IoT/Internet Business - In Q3, Xiaomi's smartphone shipments reached 43.3 million units (+0.5% YoY), maintaining a global market share of 13.6%. Gross margin decreased by 0.6 percentage points to 11.1% amid rising storage costs [2]. - IoT business revenue grew by 5.6% YoY to RMB 27.6 billion, with gross margin improving by 1.4 percentage points to 23.9% [2]. - Internet business revenue increased by 10.8% YoY to RMB 9.4 billion, maintaining a high gross margin of 76.9% [2]. Automotive Business - The automotive segment began to turn profitable in Q3 2025, with deliveries reaching a record high of 109,000 units. Revenue increased by 37% quarter-on-quarter to RMB 25.9 billion, with a gross margin of 25.5%, up 8.4 percentage points YoY [2]. - The report maintains a 2026 automotive shipment forecast of 700,000 units, with expectations for continued profitability and growth driven by the company's high-end strategy and capacity ramp-up [2][3]. Profit Forecast and Valuation - The report revises revenue forecasts for 2025-2027 down by 0.3%/2.3%/1.9% and non-GAAP net profit forecasts down by 1.6%/7.6%/4.3% to RMB 43.4 billion, RMB 48.2 billion, and RMB 62.4 billion respectively [3][9]. - Using a sum-of-the-parts (SOTP) valuation method, the target price is set at HKD 53.8, corresponding to a 27x PE for 2026 [3][13].

Investment Rating - The report maintains a "Buy" rating for Xiaomi Group with a target price of HKD 65.4, down from the previous HKD 67.8 [1][4][14]. Core Insights - Xiaomi's total revenue for Q2 2025 reached RMB 116 billion, representing a year-on-year growth of 30.5% and a quarter-on-quarter increase of 4.2%. Adjusted net profit grew by 75.4% to RMB 10.8 billion [1][4]. - The overall gross margin for the group was 22.5%, up 1.8 percentage points year-on-year but down 0.3 percentage points from Q1 2025 [1]. - The automotive business showed strong performance with a gross margin of 26.4%, benefiting from scale effects and a higher proportion of high-end model deliveries [2][3]. Summary by Sections Automotive Business - Q2 2025 saw a record delivery of 81,302 vehicles, with revenue increasing by 14% quarter-on-quarter to RMB 20.6 billion. The gross margin for the automotive segment improved significantly from 15.4% to 26.4% year-on-year [2]. - The company is optimistic about the automotive business's profitability, especially with its high-end strategy, and anticipates potential profitability in upcoming quarters [2][3]. Smartphone/IoT/Internet Business - The smartphone segment faced challenges, with revenue declining by 2.1% year-on-year to RMB 45.5 billion and a gross margin contraction to 11.5% [3]. - IoT revenue grew by 44.7% year-on-year to RMB 38.7 billion, driven by high-value smart home appliances, maintaining a strong gross margin of 22.5% [3]. - Internet services continued to show stable growth, with a 10.1% year-on-year revenue increase to RMB 9.1 billion and a high gross margin of 75.4% [3]. Profit Forecast and Valuation - Due to weak global smartphone demand, revenue forecasts for 2025-2027 were adjusted downwards by 2.2%, 0.5%, and 0.2%, respectively. However, net profit forecasts were raised by 9.5%, 4.3%, and 7.8% for the same period [4]. - The target price of HKD 65.4 corresponds to a 30x PE ratio for 2026, reflecting the company's strong IoT and AI ecosystem value [4][14]. Financial Metrics - The report projects a revenue increase to RMB 479.9 billion in 2025, with a net profit of RMB 44.3 billion, representing a 62.2% year-on-year growth [9][12]. - The gross margin is expected to stabilize around 22.7% in 2026, with a projected net profit margin of 9.1% [12][13].

Investment Rating - The report maintains a "Buy" rating for Xiaomi Group with a target price of HKD 67.80, down from the previous HKD 71.20 [1][4][14]. Core Insights - Xiaomi's revenue for Q2 2025 is expected to grow by 29% year-on-year, with a net profit attributable to the parent company increasing by 56% [1][4]. - The automotive business is projected to generate revenue of RMB 20.4 billion in Q2 2025, reflecting a 10% quarter-on-quarter increase, with a focus on high-quality development in the automotive industry [2][4]. - The smartphone and IoT businesses are expected to face challenges due to rising storage prices, which may impact profit margins [3][4]. Summary by Sections Automotive Business - Q2 2025 automotive shipments are estimated at approximately 81,000 units, with an average selling price (ASP) increasing quarter-on-quarter, leading to a revenue of RMB 20.4 billion [2]. - The company anticipates total annual sales of 436,000 units for 2025, benefiting from scale effects that could enhance profit margins [2]. Smartphone/IoT/Internet Business - In Q2 2025, Xiaomi's smartphone shipments in China are expected to reach 10.4 million units, a 3.4% year-on-year increase, with market share rising to 15.1% [3]. - The IoT business is projected to grow by 37% year-on-year, while the internet services segment is expected to increase by 15% [3]. Profit Forecast and Valuation - Revenue forecasts for 2025-2027 have been adjusted downwards by 0.9%, 1.6%, and 1.2%, respectively, with net profit estimates also reduced by 1.3%, 1.7%, and 1.5% [4]. - The target price of HKD 67.80 corresponds to a 40x PE ratio for 2025, reflecting the company's valuation based on the sum-of-the-parts (SOTP) method [4][14].

Investment Rating - The report maintains a "Buy" rating for the company [8] - The target price is set at HKD 71.20 [8][9] Core Insights - The company's revenue for Q1 2025 reached a historical high of RMB 111.3 billion, with a year-on-year growth of 47% [1] - Adjusted operating profit increased by 114% year-on-year to RMB 9.96 billion [1] - The IoT and automotive business showed strong gross margins, with the IoT revenue growing by 58.7% year-on-year to RMB 32.3 billion [2] - The automotive segment's gross margin improved to 23.2%, benefiting from increased scale [3] - The smartphone average selling price (ASP) reached a record high of RMB 1,211, with a gross margin of 12.4% [4] Summary by Sections Revenue and Profitability - Q1 2025 revenue was RMB 111.3 billion, a 47% increase year-on-year [1] - Adjusted operating profit for Q1 2025 was RMB 9.96 billion, up 114% year-on-year [1] - IoT revenue reached RMB 32.3 billion, with a gross margin of 25.2%, up 5.4 percentage points year-on-year [2] Automotive Business - The company delivered 75,869 units of the SU7 series in Q1 [3] - The automotive segment reported a gross margin of 23.2%, exceeding expectations [3] - The first SUV, YU7, is expected to launch in July 2025, with a focus on consumer feedback post-launch [3] Smartphone Segment - The smartphone ASP reached RMB 1,211, marking a 5.8% year-on-year increase [4] - The smartphone business maintained a gross margin of 12.4% [4] - The launch of self-developed chips is anticipated to enhance the company's high-end market share [4] Valuation and Future Outlook - The target price of HKD 71.20 is based on a sum-of-the-parts (SOTP) valuation method, reflecting the growth potential in IoT and automotive sectors [5][17] - The forecasted net profit for 2025 is adjusted to RMB 40.99 billion, with a projected growth rate of 50.06% [7][15] - The report anticipates a continued increase in IoT revenue, projecting a 24% year-on-year growth for 2025 [2]

Investment Rating - The report maintains a "Buy" rating for the company [8] - The target price is set at HKD 71.20 [8][9] Core Insights - The company's revenue for Q1 2025 reached a historical high of RMB 111.3 billion, with a year-on-year growth of 47% [1] - Adjusted operating profit increased by 114% year-on-year to RMB 9.96 billion [1] - The IoT and automotive business showed strong gross margins, with the smartphone ASP reaching a record high [1] - The launch of self-developed chips is seen as a significant step for the brand in expanding its ecosystem [1] Summary by Sections IoT and Consumer Products - In Q1 2025, IoT and consumer products revenue grew by 58.7% year-on-year to RMB 32.3 billion, with a gross margin of 25.2% [2] - The growth is attributed to the rapid expansion of large home appliances, which saw a revenue increase of 113.8% year-on-year [2] - The forecast for the IoT business is a 24% year-on-year revenue growth in 2025, with an adjusted gross margin prediction of 23.8% [2] Automotive Business - The automotive division reported a gross margin of 23.2%, exceeding previous forecasts [3] - The company delivered 75,869 units of the SU7 series in Q1, although the division incurred an operating loss of RMB 500 million [3] - The first SUV, YU7, is expected to launch in July 2025, with consumer feedback being a key focus [3] Smartphone Business - The smartphone ASP for Q1 2025 was RMB 1,211, marking a 5.8% year-on-year increase [4] - The smartphone business maintained a gross margin of 12.4%, reflecting stability despite a weak overall market [4] - The introduction of self-developed chips is anticipated to enhance the company's market share in the high-end smartphone segment [4] Financial Projections - The company’s projected revenue for 2025 is RMB 495.1 billion, with a year-on-year growth of 35.3% [7] - The net profit attributable to the parent company is forecasted to reach RMB 40.99 billion in 2025, representing a 50.1% increase [7] - The report adjusts the non-GAAP net profit estimates for 2025-2027 to RMB 41.0 billion, RMB 51.3 billion, and RMB 63.2 billion respectively [5] Valuation Methodology - The target price of HKD 71.20 is based on a sum-of-the-parts (SOTP) valuation method, assuming a long-term exchange rate of HKD to RMB at 0.92 [17] - The valuation reflects a 41x PE ratio for the 2025 forecast [17] - The smartphone and IoT business is valued at HKD 44.9 per share, while the automotive business is valued at HKD 26.3 per share [19]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 71.20 [8][17]. Core Views - The company is expected to see a revenue growth of 44% year-on-year in Q1 2025, with a gross margin improvement of 0.9 percentage points quarter-on-quarter, and a net profit attributable to the parent company increasing by 47% year-on-year [1][5]. - The automotive business is projected to generate revenue of HKD 18.2 billion in Q1 2025, reflecting a 9% quarter-on-quarter growth [2][5]. - The report highlights three key factors influencing the company's business: the automotive sector, tariff impacts, and advancements in AI technology [1][4][5]. Revenue and Profit Forecast - The company’s revenue is forecasted to reach RMB 483.63 billion in 2025, with a year-on-year growth of 32.17% [7][15]. - The net profit attributable to the parent company is expected to be RMB 40.52 billion in 2025, representing a 48.36% increase year-on-year [7][15]. - The earnings per share (EPS) is projected to be RMB 1.61 in 2025 [7][15]. Automotive Business Insights - The company anticipates delivering 76,000 vehicles in Q1 2025, with the automotive business revenue expected to reach HKD 18.2 billion [2][5]. - The first SUV model, YU7, is expected to launch in June-July 2025, and consumer feedback post-launch will be crucial [2]. AI Developments - The company has launched its first inference model, Xiaomi MiMo, which has shown superior performance in public evaluations compared to competitors [3]. - The report expresses optimism regarding the company's AI capabilities enhancing its entire product ecosystem, thereby increasing consumer engagement [3]. Tariff Impact - The direct impact of tariffs on the company is considered limited, with a focus on how competitors like Apple respond to tariff challenges [4][5]. Valuation Methodology - The target price of HKD 71.20 is based on a sum-of-the-parts (SOTP) valuation method, assuming a forward HKD to RMB exchange rate of 0.92, corresponding to a 40 times PE ratio for 2025 [5][17]. - The valuation includes HKD 27.2 per share for the automotive business and HKD 44 for the mobile and IoT segments [19].