Core Viewpoint - Xiaomi Group reported strong Q2 results, with significant revenue and profit growth despite market challenges [1][2][3] Financial Performance - Q2 total revenue reached 1159.56 billion RMB, a year-on-year increase of 30.5% [1] - Adjusted net profit for Q2 was 108 billion RMB, up 75.4% year-on-year [1] - For the first half of the year, total revenue was 2272.49 billion RMB, growing 38.2% year-on-year, with adjusted net profit of 215.06 billion RMB, a 69.8% increase [1] Business Segments - Smartphone revenue in Q2 was 455 billion RMB, accounting for 39.3% of total revenue, with global smartphone shipments of 42.4 million units, a 0.6% year-on-year increase [1][2] - IoT and lifestyle products revenue reached 387 billion RMB, a 44.7% year-on-year increase, with a gross margin of 22.5% [3][4] - Smart home appliances saw a revenue increase of 66.2%, with air conditioner shipments exceeding 5.4 million units, a 60% year-on-year rise [4] Market Position - Xiaomi ranked first in Southeast Asia with a market share of 18.9% and second in Europe with a 23.4% market share [2] - In the high-end smartphone segment in mainland China, Xiaomi's sales accounted for 27.6%, a 5.5 percentage point increase year-on-year [2] Automotive Business - Revenue from the smart electric vehicle and AI innovation segment was 213 billion RMB, with automotive revenue at 206 billion RMB [5] - Operating loss for the automotive segment was reduced to 3 billion RMB from 11.2 billion RMB year-on-year [6] - In Q2, Xiaomi delivered 81,302 vehicles, a 7.16% increase from the previous quarter [6][7] Future Outlook - Xiaomi aims to achieve profitability in its automotive business in the second half of the year, with expectations of surpassing competitors in the electric vehicle market [7][8] - The company plans to continue its transformation focusing on technology, brand enhancement, global market expansion, and ecosystem development [8]

Core Insights - Xiaomi Group reported a total revenue of 116 billion yuan for Q2 2025, representing a year-on-year growth of 30.5%, and a net profit of 11.9 billion yuan, up 134.2% year-on-year [1] - Adjusted net profit, based on non-IFRS measures, reached 10.8 billion yuan, reflecting a 75.4% increase year-on-year [1] Financial Performance - Revenue and profit reached historical highs, indicating strong performance in the second quarter [2] - The company’s air conditioning sales exceeded 5 million units, contributing significantly to the IoT business revenue growth [6][21] - The overall growth in the home appliance sector was reported at 66%, with air conditioning being a standout category [21] IoT and Retail Expansion - The AIoT segment showed robust growth in both domestic and international markets, driven by the expansion of retail channels [3][4] - Xiaomi plans to open 400 to 500 new retail stores globally by the end of the year, with a target of over 1,000 stores in the following year [4] - The company’s IoT business is expected to benefit significantly from the establishment of a controlled retail channel [4] Mobile Business Insights - The mobile business experienced a slight decline in gross margin due to rising component costs, particularly in memory and battery materials [5][6] - The company anticipates a recovery in mobile gross margins by Q4 2025, coinciding with the launch of new products [5][6] - Long-term gross margin improvement in the mobile segment is expected to be driven by a focus on high-end products and technological investments [6] R&D and AI Investments - R&D spending increased by over 40% year-on-year, with significant investments in core technologies such as chips and AI [7][25] - The company is committed to enhancing its AI capabilities, with 25% of its R&D budget allocated to AI technology development [25] Automotive Business - The automotive segment achieved a gross margin of 26.4%, benefiting from a strategic focus on high-end vehicle offerings [10] - The average selling price of vehicles reached approximately 253,000 yuan, indicating a successful high-end market entry [10] - The company aims to achieve profitability in its automotive business by the second half of the year, although cumulative profitability remains a long-term goal [11][18] International Market Strategy - Xiaomi's international internet business is growing faster than its domestic counterpart, with a focus on localized operations to enhance user engagement [12][13] - The company plans to enter the European market by 2027, leveraging its established business model from China [19][20] Home Appliance Sector - The home appliance business is expected to continue its growth trajectory, with significant potential remaining in the Chinese market [24] - The company is focused on maintaining competitive pricing and product quality despite industry-wide price wars [21][24]

Core Insights - Xiaomi Group reported a total revenue of RMB 115.96 billion for Q2 2025, marking a year-on-year growth of 30.5% and surpassing RMB 100 billion for three consecutive quarters [1][2] - The adjusted net profit reached RMB 10.83 billion, a significant increase of 75.4% year-on-year, with two consecutive quarters exceeding RMB 10 billion [1][2] Financial Performance - Revenue breakdown shows that the smartphone and AIoT segment contributed RMB 94.69 billion, accounting for 81.7% of total revenue, while the smart electric vehicle and AI innovation business generated RMB 21.26 billion, representing 18.3% of total revenue [4] - Gross profit for the quarter was RMB 26.10 billion, up 41.9% year-on-year, with an operating profit of RMB 13.44 billion, reflecting a 128.2% increase [2][4] Smart Electric Vehicle Business - Revenue from the smart electric vehicle and AI innovation segment grew by 234% to RMB 213 billion, with a gross margin of 26.4% despite an operating loss of RMB 3 billion [3][5] - Xiaomi delivered a record 81,302 vehicles in Q2, maintaining its target of delivering 350,000 vehicles for the year [4][5] Research and Development Investment - R&D expenditure reached RMB 7.8 billion in Q2, a 41.2% increase year-on-year, with an expected total investment of RMB 30 billion for the year [5][6] - The average selling price (ASP) of Xiaomi's electric vehicles is RMB 254,000, with a focus on reducing per-unit costs through increased delivery volumes [6] Future Plans - Xiaomi plans to enter the European electric vehicle market by 2027, indicating a strategic expansion in its automotive business [7]

Core Viewpoint - Xiaomi Group reported strong financial performance for Q1 2025, with significant year-on-year growth in revenue and net profit, indicating robust business expansion and successful high-end product strategy [1][2][3] Financial Performance - Q1 2025 revenue reached 1112.93 billion yuan, a 47.4% increase year-on-year - Net profit attributable to shareholders was 109.24 billion yuan, up 161.2% year-on-year - Adjusted net profit was 106.76 billion yuan, reflecting a 64.5% year-on-year growth - Gross margin improved to 22.8%, up 0.5 percentage points, while net profit margin increased to 9.8%, up 4.3 percentage points [1] Smartphone Business - Xiaomi regained the top position in smartphone sales in mainland China after ten years, with Q1 2025 smartphone revenue of 506 billion yuan, a year-on-year increase of 8.9% - Global smartphone shipments reached 41.8 million units, a 3.0% increase year-on-year, marking seven consecutive quarters of growth - Average selling price of smartphones rose to 1210.5 yuan, up 5.7% year-on-year, with high-end models accounting for 25% of total sales in mainland China, an increase of 3.3 percentage points [1][2] IoT and Consumer Products - IoT and consumer products revenue reached 323 billion yuan in Q1 2025, a 58.7% year-on-year increase, with a gross margin of 25.2%, up 5.4 percentage points - Smart home appliances saw over 100% growth, with air conditioner shipments exceeding 1.1 million units, and refrigerators and washing machines also showing significant growth [2][3] Automotive Business - Automotive revenue for Q1 2025 was 181 billion yuan, driven by increased deliveries of the Xiaomi SU7 model, with 75,869 units delivered, an 8.86% increase from the previous quarter - The automotive business reported a loss of 5 billion yuan, a reduction of 50.2% from the previous quarter, with a gross margin of 23.2% - The company expects to reach a profit inflection point in its automotive business by 2025, contributing positively to overall performance [3][4] Future Projections - Projected net profits for Xiaomi Group are 423.9 billion yuan in 2025, 557.5 billion yuan in 2026, and 700.8 billion yuan in 2027, maintaining a "buy" rating [4]

Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The company's performance in Q1 2025 exceeded expectations, with revenue of 111.3 billion yuan (yoy +47.4%) and Non-GAAP net profit of 10.7 billion yuan (yoy +64.5%) [5][6] - The IoT business continues to show strong growth, driven by major appliances, with revenue of 32.3 billion yuan (yoy +58.7%) [6] - The automotive business is expected to gain momentum with the upcoming launch of the YU7 model, which is anticipated to enhance sales and profitability [6][7] - The smartphone segment shows improvement in gross margin and average selling price (ASP), with ASP reaching 1,211 yuan (yoy +5.8%) [7] Summary by Sections Financial Performance - Q1 2025 revenue was 111.3 billion yuan, exceeding Bloomberg's expectations by 2.1% [5] - Non-GAAP net profit for Q1 2025 was 10.7 billion yuan, surpassing expectations by 17.7% [5] - Revenue breakdown: - Mobile business: 50.6 billion yuan (yoy +8.9%) [5] - IoT business: 32.3 billion yuan (yoy +58.7%) [5] - Internet services: 9.1 billion yuan (yoy +12.8%) [5] - Smart automotive and other innovative businesses: 18.6 billion yuan [5] IoT Business - The IoT segment's revenue growth is primarily driven by major appliances, with a significant increase in sales of air conditioners, refrigerators, and washing machines [6] - The gross margin for IoT reached 25.2%, an increase of 5.3 percentage points year-on-year [6] - A new smart appliance factory is expected to start production in November 2025, aiming for an annual output of 3 million air conditioners by 2026 [6] Automotive Business - Automotive revenue for Q1 2025 was 18.6 billion yuan, with a gross margin of 23.2% [6] - The YU7 model is set to launch in July 2025, featuring advanced technology and expected to drive sales growth [6][7] Smartphone Business - The smartphone segment's gross margin improved to 12.4% in Q1 2025 [7] - The ASP for smartphones reached a record high of 1,211 yuan, with a market share increase in the high-end segment [7] Future Projections - Revenue projections for 2025, 2026, and 2027 are 482.7 billion yuan, 612.7 billion yuan, and 713.5 billion yuan respectively, with year-on-year growth rates of 31.9%, 26.9%, and 16.5% [8] - Adjusted net profit forecasts for the same years are 41.2 billion yuan, 56.9 billion yuan, and 69.9 billion yuan, reflecting growth rates of 51.3%, 38.1%, and 22.9% [8]

Core Viewpoint - The company is expected to see continued profit growth in Q2 2025, driven by positive business performance and the upcoming launch of Yu7 in July 2025, which serves as a catalyst for growth [1]. Financial Performance - In Q1 2025, the company's non-GAAP net profit reached 10.7 billion, a year-on-year increase of 64.5%, exceeding expectations due to better-than-expected gross margins in IoT and automotive sectors [1]. - The core business profit was 11.2 billion, while the automotive and new business incurred a loss of 0.5 billion [1]. - The company sold 41.8 million smartphones, a 2% quarter-on-quarter decline, primarily due to weak demand in overseas markets like India [1]. Revenue Breakdown - The average selling price (ASP) increased by 6% year-on-year and 1% quarter-on-quarter, benefiting from improved product mix [2]. - Smartphone gross margin decreased by 2.4 percentage points to 12.4% year-on-year due to rising costs of core components, but improved by 0.4 percentage points quarter-on-quarter due to better product mix in overseas markets [2]. - IoT revenue reached 32.3 billion, a year-on-year increase of 59% and a quarter-on-quarter increase of 5%, driven by government subsidies and enhanced brand strength [2]. - The gross margin for IoT improved by 5.3 percentage points to 25.2% due to higher margins in major appliances and product mix improvements [2]. - Internet revenue was 9.1 billion, showing a quarter-on-quarter decline of 3%, with a gross margin of 76.9% [2]. - Automotive sales reached 76,000 units, with an ASP of 238,000, slightly up from 234,000 in Q4 2024, primarily driven by the SU7 ultra model [2]. - The automotive gross margin improved by 3 percentage points to 23% due to changes in product mix [2]. Future Outlook - The company is focusing on high-quality products in its smartphone business, with expectations for further ASP increases [2]. - IoT business revenue growth is anticipated to reach 30% in 2025, supported by enhanced brand strength and optimized product mix [2]. - The company expects to exceed 350,000 units in automotive deliveries for the year, with improved gross margins [2].

Investment Rating - The report maintains a "Buy" rating for the company [8] - The target price is set at HKD 71.20 [8][9] Core Insights - The company's revenue for Q1 2025 reached a historical high of RMB 111.3 billion, with a year-on-year growth of 47% [1] - Adjusted operating profit increased by 114% year-on-year to RMB 9.96 billion [1] - The IoT and automotive business showed strong gross margins, with the IoT revenue growing by 58.7% year-on-year to RMB 32.3 billion [2] - The automotive segment's gross margin improved to 23.2%, benefiting from increased scale [3] - The smartphone average selling price (ASP) reached a record high of RMB 1,211, with a gross margin of 12.4% [4] Summary by Sections Revenue and Profitability - Q1 2025 revenue was RMB 111.3 billion, a 47% increase year-on-year [1] - Adjusted operating profit for Q1 2025 was RMB 9.96 billion, up 114% year-on-year [1] - IoT revenue reached RMB 32.3 billion, with a gross margin of 25.2%, up 5.4 percentage points year-on-year [2] Automotive Business - The company delivered 75,869 units of the SU7 series in Q1 [3] - The automotive segment reported a gross margin of 23.2%, exceeding expectations [3] - The first SUV, YU7, is expected to launch in July 2025, with a focus on consumer feedback post-launch [3] Smartphone Segment - The smartphone ASP reached RMB 1,211, marking a 5.8% year-on-year increase [4] - The smartphone business maintained a gross margin of 12.4% [4] - The launch of self-developed chips is anticipated to enhance the company's high-end market share [4] Valuation and Future Outlook - The target price of HKD 71.20 is based on a sum-of-the-parts (SOTP) valuation method, reflecting the growth potential in IoT and automotive sectors [5][17] - The forecasted net profit for 2025 is adjusted to RMB 40.99 billion, with a projected growth rate of 50.06% [7][15] - The report anticipates a continued increase in IoT revenue, projecting a 24% year-on-year growth for 2025 [2]

Core Viewpoint - The company reported strong financial performance in Q1 2025, with significant year-on-year growth in revenue and net profit, indicating improved profitability and operational efficiency [2]. Group 1: Financial Performance - In Q1 2025, the company achieved revenue of 111.3 billion yuan, a year-on-year increase of 47.4%, marking a record high for a single quarter and surpassing 100 billion yuan for two consecutive quarters [2]. - The Non-IFRS net profit reached 10.7 billion yuan, up 64.5% year-on-year, with a net profit margin of 9.6%, reflecting a notable improvement in profitability [2]. Group 2: Smartphone Business - The company maintained its position among the top three global smartphone manufacturers for 19 consecutive quarters, with Q1 2025 smartphone shipments increasing by 3% year-on-year to 41.8 million units [3]. - In the domestic market, the high-end smartphone shipment proportion rose to 25%, with a market share of 18.8% in mainland China, a year-on-year increase of 4.7 percentage points, marking a return to the top position after ten years [3]. - The average selling price (ASP) of smartphones increased to 1,211 yuan, up 5.8% year-on-year and 0.7% quarter-on-quarter, driven by government subsidies and a higher proportion of high-ASP domestic shipments [3]. - The gross margin for the smartphone business was 12.4%, a slight increase from 12.0% in Q4 2024, primarily due to improvements in the product mix in overseas markets [3]. Group 3: IoT and Internet Business - The IoT business generated revenue of 32.3 billion yuan in Q1 2025, with a remarkable year-on-year growth rate of 59%, and the revenue from smart home appliances surged by 113.8% [4]. - Air conditioner shipments increased by over 65% to more than 1.1 million units, refrigerator shipments also rose by over 65% to more than 880,000 units, and washing machine shipments more than doubled to 740,000 units [4]. - The internet services revenue grew by 13% year-on-year to 9.1 billion yuan, with advertising revenue increasing by 20%, contributing to the overall growth of the internet business [4]. - The number of monthly active users (MAU) for the company's internet services reached 720 million globally and 180 million in mainland China, both hitting historical highs [4]. Group 4: Automotive and AI Business - In Q1 2025, the company rebranded its automotive business to include AI, generating revenue of 18.6 billion yuan, with a gross margin of 23.2% [5]. - The number of vehicle deliveries increased by 8.9% from Q4 2024 to 75,869 units, with the ASP rising from 234,000 yuan in Q4 2024 to 238,000 yuan in Q1 2025 [5]. - The company plans to launch the YU7 series, a luxury high-performance SUV, in July 2025, featuring advanced technology and long-range capabilities [5].

Overall Performance - Xiaomi Group reported a total revenue of 111.3 billion RMB for Q1 2025, representing a year-on-year growth of 47.3%, driven primarily by the IoT segment and automotive business [1][11] - The gross margin for the quarter was 22.8%, exceeding market expectations of 21.4%, largely due to improvements in the IoT and automotive sectors [14][16] Smartphone Business - Revenue from the smartphone segment was 50.6 billion RMB, below market expectations of 51.3 billion RMB, with a year-on-year growth of only 8.9% [2][25] - Smartphone shipments reached 41.8 million units, reflecting a modest growth of 3% year-on-year, with domestic sales increasing by 40% while overseas sales declined significantly [27][31] - The average selling price (ASP) of smartphones was 1,211 RMB, up 10.5% year-on-year, supported by a higher proportion of domestic sales [31][35] IoT Business - The IoT segment generated revenue of 32.3 billion RMB, marking a year-on-year increase of 58.7%, significantly benefiting from government subsidies [37][39] - The gross margin for IoT products was 25.2%, up 5.3 percentage points year-on-year, driven by strong sales in large appliances and wearables [39][41] Automotive Business - The automotive segment reported combined revenue of 18.6 billion RMB, with a gross margin of 23.2%, surpassing market expectations of 20.8% [2][18] - The company sold 76,000 vehicles in the quarter, with an average selling price of 239,000 RMB, indicating a 2% increase from the previous quarter [19][22] - The automotive business is expected to exceed the initial annual target of 350,000 units, with potential adjustments to aim for 400,000 units due to strong demand [6][18] Internet Services - Revenue from internet services was 9.1 billion RMB, growing by 12.8% year-on-year, primarily driven by advertising services [41][43] - Advertising revenue reached 6.6 billion RMB, reflecting a year-on-year growth of 20%, while value-added services remained stagnant [41][43] Cost Management - Total operating expenses for the quarter were 15.4 billion RMB, with a decrease in the expense ratio by 1.4 percentage points due to improved revenue performance [47][50] - Marketing expenses decreased by 5 billion RMB compared to the previous quarter, indicating a more efficient allocation of resources [47][50] Future Outlook - The company is expected to continue benefiting from government subsidies in the IoT sector and strong demand in the automotive market, with a focus on maintaining growth in these areas [5][6] - The upcoming launch of new models, such as the YU7, is anticipated to further enhance market confidence and sales performance [6][24]