Investment Rating - The report maintains a "Buy" rating for Xiaomi Group (1810 HK) with a target price of 71.20 HKD [11][33]. Core Insights - The self-developed chips represent a significant milestone for Xiaomi and the Chinese semiconductor design industry, impacting business operations, financial metrics, and market dynamics [1]. - Xiaomi's self-research in chips is a crucial step for brand manufacturers to build an independent ecosystem, similar to Apple's established ecosystem [2][12]. - Self-developed chips are expected to help Xiaomi and other brands expand their market share in the high-end smartphone segment, where Xiaomi currently holds only 6% of the market for phones priced above 4000 RMB [3][14]. - The chip business will likely increase R&D expenses initially, which may suppress gross margins before improving them as production scales up [4][19]. - Xiaomi's self-developed chips could disrupt the third-party smartphone chip market, enhancing its bargaining power with suppliers [5][26]. - The company emphasizes a consumer-oriented strategy to minimize policy risks, focusing on legal compliance and brand competitiveness [6][28]. - Future chip developments may include 5G baseband and smart cockpit chips, indicating a strategic evolution from consumer to industrial applications [7][30]. Summary by Sections Chip Development Impact - Self-research in chips is essential for building a competitive ecosystem, akin to Apple's model [2][12]. - Xiaomi's market share in high-end smartphones is significantly lower than competitors, indicating room for growth through self-developed chips [3][14]. Financial Implications - R&D expenses have risen from 5.8 billion RMB in 2018 to an expected 24 billion RMB in 2024, with R&D as a percentage of revenue increasing from 3% to 7% [4][19]. - Initial gross margins may decline due to high fixed costs associated with chip design, but long-term improvements are anticipated as production scales [4][19]. Market Dynamics - Xiaomi's self-developed chips could lead to a contraction in the third-party chip market, enhancing its competitive position [5][26]. - The company is the largest smartphone chip purchaser globally, indicating significant market influence [5][26]. Strategic Focus - Xiaomi's commitment to a consumer-focused strategy aims to mitigate risks associated with geopolitical tensions and regulatory challenges [6][28]. - Future chip initiatives may target advanced applications, such as 5G and automotive technologies, reflecting a broader strategic vision [7][30].

Group 1: Macro Insights - The report discusses the potential impact of Trump's proposed 50% tariffs on the EU, suggesting that the likelihood of these tariffs being implemented is low due to the current vulnerabilities in the US political and financial markets [2][3][16] - Recent adjustments in LPR and deposit rates indicate a monetary easing trend, with LPR down by 10 basis points and deposit rates reduced by 5 to 25 basis points, which may support economic activity [2][3] - The US House of Representatives passed the "Beautiful Act," which is expected to increase fiscal expansion, potentially leading to higher long-term US Treasury yields and impacting global markets [3][16] Group 2: Sector Analysis - The report highlights the recovery potential in the Hong Kong real estate market, driven by factors such as potential RMB appreciation, policy easing, and continued inflow of talent from the mainland [18] - The insurance sector is experiencing a wave of equity stakes, with a focus on high dividend yield stocks, indicating a shift in investment strategy towards income-generating assets [19] - The report emphasizes the growth potential in the uranium market due to the revival of nuclear energy initiatives in the US, which may lead to increased demand and higher prices for uranium [14] Group 3: Company-Specific Insights - Horizon Robotics is highlighted as a leading supplier of advanced driver-assistance chips, with expectations for growth driven by partnerships with major automotive manufacturers [22] - Atour Group reported a revenue increase of 29.8% year-on-year in Q1 2025, indicating strong operational momentum despite challenges in the business travel market [23] - Xiaomi's recent product launch event showcased new self-developed chips, which are expected to enhance the company's competitive position in the smartphone market [28]

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 65.0 [1][6]. Core Insights - The company has launched multiple new products, including the Yu7 vehicle and the O1 and T1 chips, with the O1 chip's performance exceeding expectations, indicating a successful R&D investment in the chip sector [6][8]. - The company's "human-vehicle-home" ecosystem strategy is showing positive results, with automotive sales expected to be a significant growth driver in the future [6]. - The founder's increasing influence on consumers is expected to support the launch of new products [6]. Financial Summary - For the fiscal year ending December 31, 2023, the company is projected to achieve a net profit of RMB 17,475 million, with a year-on-year growth of 606% [7]. - The earnings per share (EPS) for 2025 is forecasted to be RMB 1.57, reflecting a 66% increase from the previous year [7]. - The company’s revenue is expected to grow from RMB 270,970 million in 2023 to RMB 495,673 million in 2025, representing a significant increase [8]. Product Performance - The O1 chip features a ten-core SOC with superior performance metrics compared to competitors, indicating the company's advancements in chip technology [8]. - The Yu7 vehicle boasts a range of 835 km and a 0-100 km/h acceleration time of 5.88 seconds, positioning it competitively in the SUV market [8]. Sales Performance - In Q4 2024, the company achieved a revenue of RMB 1,090 million, a 49% year-on-year increase, with adjusted net profit rising by 69.4% [8]. - The first quarter of 2025 saw significant growth in home appliance sales, with air conditioner sales up 103% and refrigerator sales up 145% [8].

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 65.0 [6][8]. Core Insights - The company has launched several new products, including the Yu7 vehicle and the O1 and T1 chips, with the O1 chip's performance exceeding expectations, indicating a successful R&D investment in the chip sector [6][8]. - The company's "human-vehicle-home" ecosystem strategy is showing positive results, with automotive sales expected to be a significant growth driver in the future [6][8]. - The company achieved record high earnings in Q4 2024, with a revenue of RMB 365.9 billion, a 35% year-on-year increase, and a net profit of RMB 23.7 billion, also up 35% year-on-year [8]. Summary by Sections Company Basic Information - The company operates in the electronics industry, with an H-share price of HKD 53.20 as of May 22, 2025, and a market capitalization of RMB 51.27 billion [2]. - The stock has seen a significant increase of 174% over the past month and 19.8% over the past year [2]. Financial Projections - The company is projected to achieve a net profit of RMB 39.32 billion in 2025, representing a 66% year-on-year growth, with EPS expected to be RMB 1.57 [7][8]. - Revenue is forecasted to grow from RMB 270.97 billion in 2023 to RMB 495.67 billion in 2025, with a corresponding increase in gross profit [7][8]. Product Performance - The O1 chip features a ten-core SOC with superior performance metrics compared to competitors, indicating the company's advancements in chip technology [8]. - The Yu7 vehicle boasts a range of 835 km and a 0-100 km/h acceleration time of 5.88 seconds, positioning it competitively in the SUV market [8]. Investment Recommendations - Due to the strong performance in the home appliance sector, the annual profit forecast has been raised by 18%, with expected net profits of RMB 39.3 billion, RMB 48.2 billion, and RMB 60.3 billion for 2025, 2026, and 2027 respectively [8]. - The target price corresponds to a P/E ratio of 32x for 2025, indicating a favorable investment opportunity [8].