Investment Rating - The investment rating for Xiaomi Group-W (1810 HK) is maintained at "Buy" with a target price of HKD 47.00 [1][2][5]. Core Insights - The report highlights that the rising prices of DRAM and NAND storage are negatively impacting the gross margins of consumer electronics, including Xiaomi's products. Despite this, Xiaomi's revenue is expected to grow by 10% year-on-year in 4Q25, driven by the delivery of 140,000 vehicles [1][2]. - The automotive business is showing significant growth, with expected revenue of RMB 37.2 billion in 4Q25, representing a 123% year-on-year increase. The gross margin for this segment is projected to be around 21.6% [1][3]. - The smartphone segment is facing challenges, with expected shipments declining to 37.8 million units in 4Q25, a decrease of 11.5% year-on-year, and a gross margin drop to approximately 8.5% [1][4]. - The Internet of Things (IoT) segment is anticipated to see a revenue decline of 19% year-on-year to RMB 25.2 billion, while maintaining a high gross margin of 22.2% [1][4]. - The Internet services revenue is expected to grow by 2% year-on-year to RMB 9.5 billion, with a stable gross margin of 76.9% [1][4]. Summary by Sections Automotive and New Business - In 4Q25, Xiaomi's automotive deliveries are expected to reach approximately 140,000 units, generating revenue of RMB 37.2 billion, a quarter-on-quarter increase of 28.2%. The gross margin for the automotive segment may decline to around 21.6% due to changes in model delivery proportions [3]. - For 2026, the company aims to deliver 650,000 vehicles, exceeding its initial target of 550,000 units, with an anticipated adjusted gross margin of 23.6% [3]. Smartphone/IoT/Internet - The global smartphone market is projected to see a slight decline in shipments, with Xiaomi's expected to drop to 37.8 million units in 4Q25, resulting in a gross margin decrease to 8.5% [4]. - The IoT business is forecasted to generate approximately RMB 25.2 billion in revenue for 4Q25, with a gross margin of 22.2% [4]. - Internet services are expected to yield RMB 9.5 billion in revenue, maintaining a gross margin of 76.9% [4]. Profit Forecast and Valuation - The revenue forecasts for 2025-2027 have been adjusted downward by 3.1%, 9.5%, and 11.5% respectively, with non-GAAP net profit estimates reduced by 9.1%, 21.4%, and 19.4% [5]. - The target price has been revised to HKD 47.00, based on a sum-of-the-parts (SOTP) valuation method, corresponding to a 29x PE ratio for 2026 [5][19].

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]

Core Insights - Tesla remains the top seller in the smart electric vehicle (AIEV) market but faces its largest sales decline in history, with a 8.6% drop in 2025, resulting in total sales of 1.636 million units [2][39] - In 2025, seven leading Chinese smart electric vehicle companies collectively achieved sales that are double that of Tesla, indicating a significant competitive challenge [2][40] - Despite the sales decline, Tesla's market capitalization remains robust at over 1 trillion RMB, significantly higher than the combined market value of its Chinese competitors [4][40] Tesla - In 2025, Tesla delivered approximately 1.636 million electric vehicles globally, with the Shanghai Gigafactory contributing 851,000 units, accounting for over 52% of total deliveries [10][46] - The company faces increasing pressure from rapidly rising Chinese competitors in the electric vehicle market, which is impacting its market share [10][47] - Tesla's innovation pace in key areas like autonomous driving and battery technology has slowed compared to previous years, while local competitors are catching up [10][47] Chinese Competitors - Leap Motor achieved sales of 597,000 units in 2025, surpassing its target of 500,000 units, marking a significant milestone in its growth trajectory [3][50] - Hongmeng Zhixing delivered 589,000 units, establishing a strong presence in both mainstream and high-end markets, with a notable average transaction price of 390,000 RMB [16][52] - Xpeng Motors reported a 126% year-on-year increase, delivering 429,000 units, exceeding its target of 380,000 units, although some new models underperformed [21][57] - Xiaomi Motors delivered over 410,000 units, significantly exceeding its target of 350,000 units, despite facing brand challenges [23][59] - Li Auto's sales fell to 406,000 units, down 18.8% from its target of 640,000 units, reflecting competitive pressures [26][62] - NIO delivered 326,000 units, achieving a 46.9% year-on-year growth, although it did not meet its target of 440,000 units [34][69] Market Dynamics - The combined sales of the seven leading Chinese smart electric vehicle companies indicate a growing competitive landscape that is beginning to challenge Tesla's dominance [2][40] - The market capitalization of Tesla remains a significant barrier for Chinese competitors, who have substantial growth potential but currently lack comparable valuations [4][42] - The ongoing strategic adjustments by Tesla and its competitors highlight the dynamic nature of the electric vehicle market, with companies striving to innovate and capture market share [8][44]

Core Viewpoint - Xiaomi faced a significant trust crisis among its fans due to a controversial collaboration with a KOL known for derogatory remarks about Xiaomi users, prompting a public apology and accountability measures from the company's leadership [1][3][5]. Group 1: Incident Overview - The incident was triggered by Xiaomi's plan to collaborate with a KOL who had previously made negative comments about Xiaomi users, leading to a backlash from fans who felt betrayed [3]. - Xiaomi's public relations team responded quickly, halting the collaboration and announcing disciplinary actions against involved personnel, including the dismissal of the responsible staff and penalties for senior management [5][9]. - The founder, Lei Jun, emphasized the importance of user respect and acknowledged the ongoing challenges faced by the PR team amid a series of negative public sentiments [5][10]. Group 2: Implications for the Company - The incident highlighted the need for careful vetting of KOL partnerships, focusing on value alignment rather than just traffic, revealing internal management oversights [10]. - Xiaomi's commitment to rectify the situation and maintain user trust was seen as a crucial step in rebuilding relationships with its fanbase [9][12]. - The company must continue to prioritize user satisfaction and improve both product quality and communication strategies to navigate the challenges in the new energy vehicle sector [12][13].

1月3日晚7点，因重感冒而推迟的雷军跨年直播终于上线。雷军带着小米汽车副总裁李肖爽、特别助理徐洁云，足足聊了4个多小时。 在直播中，雷军回应了"绿化带战神""小字免责""7000名法务""不让农民卖小米"等网上的舆论质疑。 对于网上很多小米绿化带出事故的事，徐洁云有点激动："这根本就是有人刻意收集视频，恶意剪辑之后贴的标签，纯粹是带节奏！" 更让他们气愤的是，车主还遭到了人身攻击。 雷军则表示，"几个月前就推出了车主维权服务，每月都会公布进展，绝对和车主站在一起。骂小米有流量，但不能故意抹黑，这是 违法行为啊！" 谈及前段时间"小米不让农民卖小米"的消息，雷军表示，"我就是在农村里长大的，我怎么可能不让农民卖小米，真的让我非常愤 怒。" 雷军提到网上流传的小米拥有7000名法务一事，"怎么可能有7000法务，希望在新的一年强化建设，坚决打击抹黑我们和车主的黑水 军。" 谈及小米此前在海报宣传当中存在的"小字"话题，雷军表示，小字确实是行业陋习，他觉得在这一点上，小米从现在做起，立刻马上 就改。 "我们把精力都放在产品和研发上，没想到会遇到这么多谣言。以后我们会分期分批回应大家的疑问，也希望大家能保持理性，不被 ...

Core Viewpoint - The article discusses Xiaomi's recent live stream led by Lei Jun, addressing various controversies and criticisms regarding the company's new vehicle, the YU7, while emphasizing transparency and commitment to quality [1]. Group 1: Material and Design Controversies - Lei Jun confirmed the authenticity of the "super steel" used in the YU7, developed in collaboration with academic experts, and invited third-party testing to validate its strength [3]. - The design of the YU7's long front end was defended as a balance of aesthetics and practicality, enhancing safety and providing a spacious front trunk [5]. Group 2: Safety Features - The vehicle's wheel detachment during collisions was explained as a safety feature designed to protect passengers by redirecting impact forces [4]. - The YU7's door handle incorporates a dual mechanical design to ensure functionality even in extreme conditions, showcasing industry-leading safety redundancy [7]. Group 3: Marketing and Public Relations - Lei Jun acknowledged the issue of "small print marketing" as a common industry practice and committed to making changes to improve clarity in advertising [8]. - The company refuted rumors about preventing farmers from selling millet, emphasizing its unrelatedness to agricultural products and expressing outrage over the misinformation [9]. Group 4: Legal and Regulatory Matters - Lei Jun denied the claim of having 7,000 legal staff, asserting that the legal team is actively pursuing cases against malicious infringement [10]. - The company is taking steps to combat defamation and misinformation, with a focus on protecting its reputation and the rights of its customers [10]. Group 5: Performance Claims - Lei Jun provided evidence to support the claim of the YU7 achieving 1,300 kilometers on a single charge, clarifying that this was based on real-world testing and not exaggerated marketing [12]. - The statement regarding the vehicle's braking performance was clarified as a subjective expression rather than a technical specification, addressing concerns about misinterpretation [11].

Core Viewpoint - Xiaomi has launched a "current vehicle selection" feature for its cars, allowing consumers to purchase new and nearly new vehicles directly through the Xiaomi Auto app, marking the company's first foray into immediate vehicle sales [2][4]. Group 1: Vehicle Offerings - The current vehicle selection includes three categories: brand new vehicles, official display vehicles, and nearly new vehicles, all of which have passed strict quality inspections [2][4]. - The nearly new vehicles are original new cars that have undergone repairs due to transportation issues and have completed official restoration and pre-sale inspections [4]. Group 2: Sales and Discounts - The vehicles available for the current selection include the YU7 Max, SU7 Max, and SU7 Ultra models, with discounts of 22,000 yuan for YU7 Max, 8,000 yuan for SU7 Max, and 19,000 yuan for SU7 Ultra [4]. - The current vehicle selection is open to all users, including those who have locked orders but have not yet received their vehicles [2]. Group 3: Production and Delivery - With the stabilization of production at Xiaomi's second-phase factory, the company has shifted from long waiting times to immediate vehicle availability [6]. - As of December 2, Xiaomi has exceeded a cumulative delivery of 500,000 vehicles since April 3, 2024, and has surpassed its initial annual delivery target of 350,000 vehicles for 2025 [6]. - In November, Xiaomi's vehicle deliveries exceeded 40,000 units for the third consecutive month, achieving a year-on-year growth of 99.7% and capturing a market share of 3.5% [6].

Core Viewpoint - Xiaomi's stock price has experienced significant volatility, with a nearly 100% increase in the first half of the year followed by a decline of over 35% from its June peak, reflecting the challenges faced by the company and its founder Lei Jun's influence on market sentiment [1] Group 1: Stock Buyback and Market Response - Lei Jun's recent investment of over 100 million HKD in Xiaomi shares and the company's aggressive stock buyback strategy, with a single buyback amount reaching up to 400 million HKD, are seen as efforts to instill confidence in the market [1] - Following these actions, Xiaomi's stock price rose over 5% on November 25, returning above 40 HKD, indicating a potential recovery trend [1] Group 2: Business Challenges - Xiaomi's smartphone business, a cornerstone of the company, reported a revenue of 46 billion CNY in Q3 2025, a year-on-year decline of 3.2%, with a gross margin dropping to 11.1% due to rising manufacturing costs and aggressive pricing strategies from competitors like Huawei [2] - The IoT and lifestyle products segment, while showing a revenue growth of 5.6% to 27.6 billion CNY in Q3, faced a 15.7% decline in smart home appliance revenue, attributed to reduced government subsidies and intensified competition [2] Group 3: Automotive Business and Trust Issues - Xiaomi's automotive division has seen rapid growth, with the 500,000th vehicle rolling off the production line in just over a year, but it faces scrutiny over product quality and marketing practices, leading to a potential trust crisis [4] - Controversies surrounding the SU7 Ultra model, including legal disputes over marketing claims, have raised questions about the integrity of the company's messaging and the founder's accountability [5][6] Group 4: Industry Implications - The challenges faced by Xiaomi reflect broader issues within the Chinese electric vehicle industry, which is transitioning from a focus on hardware to software reliability and ethical data use, highlighting the need for improved transparency and communication [6] - The company's reliance on founder Lei Jun's personal brand and the need for a shift from a "celebrity-driven" model to one based on product reliability and service quality are critical for regaining consumer trust [7]

Core Insights - Xiaomi's investment in artificial intelligence (AI) has yielded returns in 2025 that significantly exceeded expectations, according to the company's president Lu Weibing [1] - The company is shifting focus towards embodied AI after substantial investments in general AI over recent quarters, paralleling strategies seen in companies like Tesla [2] - Xiaomi's advancements in AI large models and applications have surpassed initial expectations, with a belief that the integration of AI with the physical world represents the next generation of intelligent technology [3] AI Developments - Xiaomi launched its first AI model, MiMo, in April and has recently open-sourced MiMo-Embodied, which showcases advanced performance in autonomous driving and embodied AI tasks [4] - The company has seen increased interest in AI applications within the electric vehicle (EV) sector, highlighted by the introduction of its premium SU7 Ultra, which features Hyper-Autonomous Driving technology [5] - There is a growing interest in embodied AI, leading Xiaomi to enhance its investments in robotics, following the introduction of its robot dog in 2021 and a humanoid prototype in 2022 [6] Talent Acquisition - Xiaomi is actively seeking talent to bolster its AI initiatives, recently hiring Luo Fuli, a former researcher from DeepSeek, to lead the MiMo team [7] Financial Performance - Xiaomi's smart EV and AI initiatives turned a profit for the first time in Q3, generating a record revenue of 29 billion yuan (approximately US$4.1 billion), marking a 199% year-on-year increase [8] - The company's total revenue for the quarter rose by 22% year-on-year to 113.1 billion yuan [8]

Core Viewpoint - Xiaomi has officially opened the purchase of "in-stock" vehicles through its app, allowing users to select from available models and expect delivery by the end of the year [2][4][5]. Group 1: Vehicle Availability and Types - The "in-stock" vehicles include three types: brand new vehicles, official display vehicles, and nearly new vehicles, with the latter not yet available for purchase [4][5]. - All "in-stock" vehicles are confirmed to be unregistered and come with full factory warranties and after-sales services [5][8]. Group 2: Delivery Timeline - The delivery timeline for new vehicle orders has been shortened, with some models expected to be delivered within 3 to 6 weeks after order confirmation [9][11]. - Specific delivery timelines for various models range from 3 to 38 weeks, depending on the model selected [11]. Group 3: Sales Performance and Expansion - Xiaomi's vehicle deliveries exceeded 40,000 units in November, surpassing the initial target of 350,000 units for 2025, with total deliveries since April 2024 exceeding 500,000 units [12]. - The company is expanding its sales and service network, with plans to add 36 new stores in December, bringing the total to 249 service points across 144 cities [12].