Summary of Xiaomi Group Conference Call Company Overview - **Company**: Xiaomi Group - **Industry**: Automotive and Consumer Electronics Key Points Sales Performance - In January 2026, Xiaomi delivered over 39,000 vehicles, a decrease from over 50,000 in December 2025 [1] - The decline in deliveries is attributed to: 1. The discontinuation of the first-generation SU7, with production lines being reconfigured for the new generation SU7 set to launch in April 2026 [1] 2. January had 21 working days, two fewer than December [1] - Future outlook suggests further decline in deliveries due to the impact of the Chinese New Year in February [1] Vehicle Pipeline - At least two key models are expected to launch in 2026: 1. The new generation SU7, which will officially launch in April 2026 [2] 2. The YU9 model, part of the range-extended platform, is undergoing road tests and is expected to launch in the second half of 2026 [2] - The YU7GT model has completed the necessary regulatory filings and is anticipated to be released within the year [2] - Xiaomi's target for 2026 is to deliver 550,000 vehicles, which is considered conservative compared to the previous year's performance of over 410,000 vehicles [2] - With the introduction of new models and potential capacity releases, the forecast for 2026 deliveries is adjusted to 660,000 electric vehicles [2] Cost Pressures - **Storage Costs**: The proportion of storage costs in the Bill of Materials (BOM) for Xiaomi smartphones is expected to rise from 10-15% to 20-30% by Q4 2025, impacting the gross margin to approximately 9% [3] - **Battery Costs**: The cost of lithium batteries is increasing, with a projected rise in battery costs by approximately 5,640 RMB per vehicle due to significant price increases in lithium carbonate and lithium hexafluorophosphate [4] - Overall, the smartphone industry is facing challenges from declining shipments and increased competition in the white goods market, leading to a downward revision of revenue forecasts for 2025-2027 [4] Financial Projections - Revenue expectations for 2025-2027 have been adjusted to 461.2 billion, 541.8 billion, and 600.5 billion RMB respectively, down from previous estimates [4] - Non-IFRS net profit projections have also been revised to 40 billion, 36.2 billion, and 50.2 billion RMB for the same period [4] Valuation and Target Price - The company is valued using a 30x PE ratio, resulting in a total market capitalization of approximately 1.31 trillion HKD [5] - A target price of 47 HKD is set, maintaining a "Buy" rating for the stock [5]

Economic Indicators - In January, the U.S. non-farm payrolls exceeded expectations, adding 130,000 jobs, with the unemployment rate dropping to 4.3%[4] - The U.S. labor market remains focused on recruitment contraction, with layoff intentions rising but actual layoffs not yet widespread[4] Market Reactions - U.S. stock markets reacted negatively to strong employment data, with the Dow Jones falling 66 points (0.13%) to close at 50,121 points, ending a three-day rally[9] - European markets showed mixed results, with the UK FTSE 100 reaching a new high, while the German DAX and French CAC 40 indices declined[9] Commodity and Currency Movements - Nickel prices rose by 2.23% to $17,880 per ton due to Indonesia's significant reduction in nickel production quotas from 42 million tons to 12 million tons[27] - Crude oil prices increased, with NYMEX crude oil rising 1.05% to $64.63 per barrel amid geopolitical tensions in Iran[27] Investment Insights - T-Mobile reported a 10% year-over-year increase in service revenue for Q4 2025, driven by a strong postpaid customer base, and raised its growth guidance[7] - Xiaomi's January vehicle deliveries fell to 39,000 units, down from over 50,000 in December, as the company prepares for the launch of its new SU7 model in April 2026[13] Bond Market Trends - The U.S. Treasury yields rose following the strong employment report, with the 10-year yield increasing by 3 basis points to 4.17%[30] - Asian investment-grade bond spreads widened by 2-3 basis points, reflecting a sell-off in Australian, Japanese, and Korean bonds[30]

Group 1 - Xiaomi Group's stock price increased by over 4% as of the report date [2] - Lei Jun announced the discontinuation of the first-generation SU7, with the last vehicle rolling off the production line [2] - The next generation of SU7 is expected to be launched in April [2]

Group 1 - Xiaomi Group (01810.HK) saw a stock increase of 5.34% [1] - Lei Jun announced during a live broadcast that the first generation SU7 has officially ceased production, with the last vehicle rolling off the production line [1] - The next generation SU7 is expected to be launched in April [1]

Core Viewpoint - The founder of Xiaomi, Lei Jun, announced on Weibo that the new generation SU7 is positioned as a vehicle for a new era of drivers, emphasizing enhanced driving experience and control [1] Group 1 - The SU7 features significant upgrades to its chassis, resulting in improved driving quality [1] - The intelligent electronic control system allows for more precise and stable handling [1] - Pre-orders for the SU7 have already begun, with an expected launch date in April 2026 [1]

Core Viewpoint - Xiaomi's founder Lei Jun announced on Weibo that the new generation SU7 is positioned as a vehicle for the new era of drivers, emphasizing enhanced driving control and experience [1] Group 1: Product Features - The SU7 features significant upgrades to its chassis, resulting in improved driving quality [1] - The intelligent electronic control system allows for more precise and stable handling [1] Group 2: Market Launch - The SU7 is expected to be launched in April 2026, with pre-orders already open [1]

Core Insights - The new energy vehicle market in China is experiencing a mixed performance, with some companies showing year-on-year growth while facing month-on-month declines [1][2][3] - The sales data for January indicates a challenging start to the year, influenced by structural adjustments and consumer sentiment [2][4] Group 1: Sales Performance - BYD reported January sales of 210,051 units, a year-on-year decline of 30.11% [1] - Hongmeng Zhixing achieved 57,915 deliveries in January, marking a year-on-year increase of 65.6% and becoming the only new force to exceed 50,000 monthly sales [1] - NIO delivered 27,182 vehicles in January, a significant year-on-year increase of 96.1% [1] - Li Auto faced substantial pressure with declines in both year-on-year and month-on-month sales [1][3] - Xiaomi's performance was notable, with a strong delivery figure in January, and plans for new models launching in April [1][2] Group 2: Market Trends - The overall retail volume of passenger vehicles in China from January 1-18 saw a year-on-year decline of 28% and a month-on-month drop of 37% [2] - The new energy vehicle market also faced challenges, with a year-on-year decline of 16% and a month-on-month drop of 52% [2] - The end of the vehicle purchase tax exemption policy by the end of 2025 and the impact of year-end promotions have led to a demand recovery phase in early 2026 [2] Group 3: Strategic Adjustments - Companies are shifting from price wars to innovative financing solutions, with Tesla leading the way by introducing long-term low-interest financing options [7] - Xiaomi, Li Auto, and NIO have followed suit with similar financing plans, aiming to attract consumers without direct price cuts [7] - Li Auto is also exploring deeper strategic adjustments, including potential entry into the AI and humanoid robot sectors [7] Group 4: Future Outlook - The overall sales targets for major automakers in 2026 are ambitious, with a combined target of at least 24.55 million units, representing 71.37% of last year's total sales [6] - Analysts predict a growth rate of around 10% for new energy vehicle retail volumes in 2026, despite current market challenges [6][8] - The competition among automakers is expected to shift towards new model launches and enhancing user experience in the second quarter of 2026 [8]

Core Insights - The domestic new energy vehicle market experienced a significant decline in January 2026, with all nine major manufacturers reporting a month-on-month drop in deliveries averaging 38%, with the highest decline exceeding 47% [1][2] - However, year-on-year performance showed a stark contrast, with leading brands like Zeekr and NIO nearly doubling their deliveries, while brands like Xpeng and Li Auto faced declines of 34.1% and 7.6% respectively, highlighting a widening gap between top and smaller brands [1][2] Group 1: Market Performance - The nine major manufacturers saw month-on-month delivery declines ranging from 21.2% to 47.0%, indicating market volatility due to policy adjustments and changes in consumer behavior [2][5] - Leading brand Homologous Intelligence maintained the highest delivery volume at 57,915 units, despite a 35.4% month-on-month decline, showcasing a year-on-year growth of 65.6% [2][3] - Xiaomi's deliveries exceeded 39,000 units, with a month-on-month drop of 22.3% but a year-on-year surge of 70%, indicating strong market acceptance [2][3] Group 2: Brand-Specific Insights - NIO and Zeekr emerged as the "dual engines" of year-on-year growth, both exceeding 95% growth, with NIO delivering 27,182 units (up 96.1% year-on-year) and Zeekr delivering 23,852 units (up 99.7% year-on-year) [3][4] - Li Auto and Xpeng faced challenges with year-on-year declines, with Li Auto delivering 27,668 units (down 7.6%) and Xpeng delivering 20,011 units (down 34.1%) [4][5] - Leap Motor and Lantu maintained steady growth, with Leap Motor delivering 23,591 units (up 63.9% year-on-year) and Lantu delivering 10,515 units (up 31.3% year-on-year) [4][5] Group 3: Market Dynamics and Future Outlook - The decline in January sales is attributed to short-term factors such as policy changes, seasonal demand fluctuations, and inventory management by dealers, with a forecasted 40% month-on-month drop in national retail sales of new energy vehicles [5][6] - Despite short-term pressures, the long-term growth trajectory for the new energy vehicle industry remains intact, with projections of 19 million units sold in 2026, representing a 15.2% year-on-year increase [6] - The market is expected to stabilize post-policy transition, with new product launches and supportive measures from local governments anticipated to drive recovery in February and March [6]

Core Viewpoint - The introduction of 7-year low-interest car loans by Tesla has prompted other brands to follow suit, although the execution details vary across companies [1][4]. Group 1: Tesla's 7-Year Loan Scheme - Tesla offers a 7-year low-interest loan for Model 3 and Model Y with an annual interest rate of 0.5%, which is considered very low by customers [3]. - Despite the curiosity around the 7-year loan, most customers still prefer the 5-year interest-free option, as the difference in monthly payments is negligible for those with a budget [4]. - The 7-year loan has attracted attention and traffic for Tesla, indicating that other brands are likely to adopt similar strategies in the future [4]. Group 2: Other Brands' 7-Year Loan Options - The SU7 and YU7 models from another brand offer a 7-year loan with an annual interest rate of 1%, and customers find the monthly payment of around 2500 acceptable [7]. - The 7-year loan is seen as a trend, with brands like Xiaomi also introducing similar options to boost sales amid subsidy pressures [7]. - Another brand's entire lineup can access a 7-year loan, with specific models like i8 and MEGA offering a unique 7免3 plan, allowing customers to pay only the principal for the first three years [10]. Group 3: Customer Acceptance and Market Trends - Acceptance of the 7-year loan varies, with some customers finding the rates high compared to the 5-year options, but the 7免3 plan has garnered better acceptance [11][15]. - Customers opting for 7-year loans typically include those needing lower monthly payments or first-time buyers looking for more manageable financing [12][15]. - The overall market response to the 7-year loan scheme is still developing, with some brands noting that it could serve as a means to stimulate sales in a competitive environment [18].

Core Insights - Xiaomi's founder, chairman, and CEO Lei Jun revealed the development process of the new SU7 model during a live stream in Beijing, highlighting its significance as the first Chinese car featured in the Gran Turismo 7 game [1][2] Group 1: Product Launch - The SU7 Ultra is the first Chinese car to appear in the Gran Turismo series, a highly successful racing game that has sold over 100 million copies since its inception in 1997 [1][2] - The game is known for its realistic graphics and detailed simulation of driving experiences, including accurate data on vehicle performance such as weight, tire grip, horsepower, and steering precision [5] Group 2: Market Impact - The inclusion of the SU7 Ultra in Gran Turismo 7 represents a significant milestone for Xiaomi, showcasing its automotive ambitions and enhancing brand visibility in the gaming community [1][2] - The game has developed over 20 years, accumulating a wide range of top global automotive brands, which may provide Xiaomi with valuable exposure and potential customer engagement [5]