Core Viewpoint - The company reported a strong performance in 3Q25, with adjusted net income exceeding expectations due to smart EV breakeven, investment disposal gains, and other income, while traditional business faces challenges from rising memory prices and IoT competition [1] Group 1: Financial Performance - 3Q25 revenue reached RMB113 billion, representing a 22% year-over-year increase, with gross profit margin (GPM) at 22.9%, up 0.4 percentage points quarter-over-quarter [1] - Adjusted net income for 3Q25 was RMB11.3 billion, beating expectations by 8-13%, primarily driven by investment disposal gains and other income [1] - The smart EV segment achieved its first profitable quarter with an operational profit of RMB0.7 billion and profit per vehicle exceeding RMB6,000 [2] Group 2: Business Segments - Smart EV revenue surged by 36.4% quarter-over-quarter to RMB29 billion, driven by the YU7 SUV, although GPM slightly declined to 25.5% due to initial ramp-up costs [2] - Smartphone revenue decreased by 3% year-over-year to RMB46 billion, with an average selling price (ASP) decline of 4% year-over-year [3] - IoT revenue declined by 29% quarter-over-quarter, primarily due to a 64.8% drop in smart large home appliance sales, but GPM improved to 23.9% [4] - Internet services revenue grew by 11% year-over-year to RMB9.4 billion, driven by a 17% increase in advertising revenue, with GPM at 76.9% [5] Group 3: Future Outlook - The company has adjusted its 2025 smartphone shipment target from 170 million-180 million to 160 million-170 million due to memory price pressures [3] - The company expects internet services revenue to reach RMB37 billion in 2025, reflecting a 10% year-over-year growth [5] - The new target price for the company remains at HK$71.14, with a reiteration of the BUY rating [6]

Core Viewpoint - Xiaomi's Q3 net profit reached a historic high of 11.3 billion RMB, exceeding Wall Street expectations, but the stock price fell nearly 5% post-announcement due to concerns over rising memory costs and the potential impact of the 2026 electric vehicle tax subsidy withdrawal [1][3]. Financial Performance - Xiaomi's adjusted net profit for Q3 was 11.3 billion RMB, a year-on-year increase of 81%, surpassing Wall Street forecasts [3]. - The electric vehicle and AI innovation segments reported operational profits of 700 million RMB for the first time [3]. Analyst Ratings and Price Targets - Major Wall Street firms, including Citigroup, Goldman Sachs, and Morgan Stanley, maintained "buy" or "overweight" ratings, but their target prices varied significantly [3]. - Citigroup lowered its target price from 65 HKD to 50 HKD, while Goldman Sachs reduced its target from 56.5 HKD to 53.5 HKD, and Morgan Stanley kept its target at 62 HKD [3]. Smartphone Business Challenges - Analysts agree that rising memory chip prices driven by AI demand pose a long-term structural challenge, suppressing overall industry profits [5]. - Xiaomi's strategy to prioritize market share over short-term margins has received broad support from analysts [5]. - The company aims to lock in memory supply by 2026 and focus on increasing average selling prices (ASP) while targeting 30 million high-end device shipments by 2030 [5]. Electric Vehicle Business Growth - The electric vehicle segment achieved a significant milestone with operational profits of 700 million RMB in Q3, marking it as a new growth engine for Xiaomi [7]. - Q3 revenue from the electric vehicle business reached 29 billion RMB, a year-on-year increase of 199.2% and a quarter-on-quarter increase of 36% [9]. - The delivery volume for the quarter was 108,800 units, with October alone reaching 48,600 units [9]. Diverging Predictions on Future Performance - Citigroup has lowered its smartphone shipment forecasts for 2025-2027 to 170 million, 160 million, and 166 million units, with corresponding gross margin predictions adjusted downward [8]. - Goldman Sachs also warned of margin pressures, predicting a smartphone gross margin of 8.8% for 2026, down about 1 percentage point [8]. - Morgan Stanley noted that the increase in terminal prices can only partially offset rising memory costs, indicating a reliance on product mix optimization and cost control measures [8]. Market Sentiment and Future Outlook - Despite differing predictions, all three major investment banks maintain a positive outlook on Xiaomi's electric vehicle business, with Citigroup highlighting new model releases and consumer subsidy updates as catalysts [9]. - Goldman Sachs believes the risk-reward ratio remains favorable for investors, while Morgan Stanley emphasizes that news about new models in the next 3-6 months will be crucial for stock price movements [9].

Summary of Xiaomi Corp. (1810.HK) Conference Call Company Overview - **Company**: Xiaomi Corp. (1810.HK) - **Market Cap**: HK$1.1 trillion / $143.3 billion - **Enterprise Value**: HK$915.9 billion / $117.8 billion - **Current Price**: HK$42.98 - **Target Price**: HK$56.50 - **Upside Potential**: 31.5% [6][20] Key Points Industry and Market Performance - **Singles' Day GMV**: Xiaomi reported Rmb29.0 billion GMV during the Singles' Day promotion, a 9% decrease from Rmb31.9 billion last year [1][21] - **Smartphone Rankings**: Xiaomi ranked No.2 in sales volume and GMV on JD.com, with three models in the top 10 best-sellers [23][27] - **Market Share**: Xiaomi is gaining volume share in the smartphone segment priced below Rmb3,000 while maintaining leadership in the premium segment with the Xiaomi 17 Pro Max [23][32] Product and Manufacturing Insights - **SU7 Pro/Max Delivery Times**: The waiting time for SU7 Pro and SU7 Max has been reduced to 6-9 weeks from approximately 30 weeks, indicating improved manufacturing capabilities [1][2] - **EV Manufacturing**: In October, Xiaomi delivered 48.6k units, including 15.0k SU7 models, reflecting strong demand and capacity utilization [2][20] - **Upcoming Product Cycle**: A potential new facelift for the SU7 is expected to enhance product offerings into 2026 [19][20] Financial Performance and Projections - **Revenue Growth**: Projected revenue growth for 2024 is Rmb365.9 billion, increasing to Rmb710.8 billion by 2027 [6][17] - **EBITDA Growth**: Expected EBITDA growth from Rmb30.8 billion in 2024 to Rmb79.4 billion in 2027 [6][17] - **EPS Projections**: EPS is projected to grow from Rmb1.07 in 2024 to Rmb2.38 in 2027 [6][17] Strategic Initiatives - **Subsidy for Singles' Day**: Xiaomi announced a Rmb2 billion subsidy for the 2025 Singles' Day, up from Rmb1.3-1.6 billion in previous years, to stimulate sales [24] - **AIoT Sales**: Sales pressure was noted in AIoT categories, but personal care devices showed strong growth [23] Risks and Considerations - **Market Conditions**: The company may face challenges due to a high base from the previous year, impacting year-over-year comparisons [23][32] - **Short-term Volatility**: While the share price may experience short-term fluctuations, the long-term outlook remains positive [20] Future Watchpoints - **Upcoming Results**: Anticipation for 3Q25 results in late November [20] - **Capacity Expansion**: Monitoring progress in EV manufacturing capacity ramp-up [20] - **New Product Launches**: Filing of new EV models and potential technology events towards the end of 2025 [20] Conclusion Xiaomi Corp. is positioned for growth with a strong product lineup and improved manufacturing capabilities. Despite facing challenges in the current market environment, the long-term outlook remains favorable with strategic initiatives aimed at enhancing sales and market share.