Investment Rating - The report maintains a Buy rating for Xiaomi shares, with a target price of HK$69, down from HK$73, reflecting a long-term growth thesis intact [5][11][28]. Core Insights - Xiaomi is expected to report strong 2Q25 results, with adjusted net profit projected at RMB 10.4 billion, representing a 68% year-over-year increase, despite a slight decline from the previous quarter [2][3]. - The company anticipates total revenue of RMB 114 billion for 2Q25, a 47% year-over-year increase, driven by robust IoT and EV sales [3][9]. - The smartphone segment is expected to remain flat year-over-year, with revenue of RMB 46.3 billion, while IoT revenue is projected to grow by 35% year-over-year to RMB 36 billion [3][8]. - The report highlights upcoming catalysts, including 3Q25 guidance, Phase 2 EV capacity ramp, and new product launches, which could positively impact the stock [11][28]. Revenue and Profitability - Total revenue for 2025 is estimated at RMB 483.5 billion, with adjusted net income expected to reach RMB 44.5 billion, reflecting a 63.3% growth [4][11]. - The gross margin for the overall business is projected to be 22.6% in 2025, with smartphone gross margin narrowing to 11.9% due to competitive pressures [4][8]. - EV sales are expected to contribute approximately RMB 20.7 billion in revenue for 2Q25, with gross margin improving to 24% [9][11]. Market Position and Strategy - Xiaomi's market share in the global smartphone market is reported at 14.5%, with a slight increase in the Chinese market share to 15.1% [8]. - The company is focusing on expanding its IoT and EV segments, with a strong emphasis on product mix and pricing strategies to maintain competitiveness [2][9][28]. - The report indicates a positive outlook for Xiaomi's smartphone business, driven by subsidy-driven demand in China and normalized component costs [28][29].

Investment Rating - The report rates Xiaomi shares as "Buy" with a target price of HK$73.00, indicating an expected return of 35.7% from the current price of HK$53.80 [5][16]. Core Insights - The company anticipates a 1% gain in smartphone market share and a 25%-30% growth in IoT for the full year of 2025, driven more by product strength than subsidies [2][4]. - Despite rising memory prices, Xiaomi maintains a gross margin (GM) target of over 12% for smartphones in 2025 [3][4]. - The company is committed to profitability in the home appliance market, focusing on operational efficiency and smart features to enhance its IoT offerings [4][9]. Summary by Sections Smartphone and IoT Market - The impact of the phase-out of China subsidies is diminishing, with only a 3% growth in smartphone shipments in 1Q25, suggesting that product strength is the primary growth driver [2]. - Xiaomi expects to achieve a 1% market share gain in smartphones and a 25%-30% growth in IoT for 2025 [2][4]. Home Appliance Competition - The home appliance market is experiencing intensified competition, particularly ahead of shopping festivals, but Xiaomi is focused on maintaining profitability without engaging in loss-making strategies [4]. - The company aims to ship 10 million air conditioners in 2025, leveraging its brand strength against white brands [4]. Electric Vehicle (EV) Strategy - The upcoming YU7 model has seen strong initial customer registration, with 40% of registrants being new customers, indicating positive market reception [8]. - Xiaomi plans to expand its EV production capacity significantly by 2H25 and aims to enter overseas markets by 2027 [8]. Overseas Expansion and IoT Strategy - Xiaomi is expanding its international home appliance rollout, targeting significant growth in Southeast Asia and plans to enter Europe and Latin America [9]. - The company operates over 100 overseas Mi Home stores and aims to reach 10,000 stores within five years [9]. AI and Technology Development - The company does not expect AI smartphones to gain significant traction in the next 1-2 years but is enhancing foundational AI capabilities for future scalability [10]. - Xiaomi plans to launch AI smart glasses soon, focusing on improved user experience and upgraded features [10].