On the 28th, Xiaomi announced record-breaking performance for the first quarter of 2025, with adjusted net profit reaching RMB 10.676 billion, a year-on-year increase of 64% and a quarter-on-quarter increase of 28%.
Goldman Sachs stated in a research report released on the 28th that investors should focus on Xiaomi's Investor Day event on June 3, the GMV data from the June 18 shopping festival, and the potential new product launch at the end of June.
Morgan Stanley, in a report released on the 27th, believed that the YU7 electric vehicle, scheduled for launch in July 2025, is expected to be an important catalyst for driving up the stock price. If sales perform strongly, it will help Xiaomi achieve a higher average selling price, better gross margins, and sustained profit growth.
In contrast, while the performance of smartphones and AIoT businesses during the &#34;6.18&#34; shopping festival is also worth noting, it is not as significant as the launch of the YU7 electric vehicle.
<h2>Electric Vehicle Business Steadily Advancing, YU7 Becomes Key Catalyst</h2>
On the 28th, Xiaomi announced record-breaking performance for the first quarter of 2025.
Among them, Xiaomi's Q1 electric vehicle business revenue was RMB 18.6 billion, a quarter-on-quarter increase of 12%, slightly below expectations by 2%. The gross margin for electric vehicles reached 23.2%, an increase of 2.7 percentage points quarter-on-quarter, indicating continuous improvement in the profitability of this business.
Goldman Sachs pointed out that in the coming month, several events will be key factors in driving up Xiaomi's stock price:
<blockquote>
<ul>
<li>The first phase GMV (Gross Merchandise Volume) data for the 618 shopping festival will be released on May 31, and is expected to show growth compared to last year.</li>
<li>The final GMV data for Xiaomi's 618 shopping festival will be released on June 18, which will be an important indicator of its market performance.</li>
<li>On June 3, during Xiaomi's Investor Day, the company will share more strategic directions and business progress.</li>
<li>A new product launch event is expected to be held at the end of June, which may introduce new models such as the YU7, Xiaomi MIX Flip 2, and Redmi K80 Ultra.</li>
</ul>
</blockquote>
Morgan Stanley believes that the second electric vehicle, YU7, scheduled for launch in July 2025, will be Xiaomi's most important catalyst this year. As an SUV model, the average selling price of the YU7 is expected to be higher than that of the existing SU7 sedan. If sales perform strongly, it will help Xiaomi achieve a higher average selling price, better gross margins, and sustained profit growth.
In contrast, while the performance of smartphones and AIoT businesses during the &#34;6.18&#34; shopping festival is also worth noting, it is not as significant as the launch of the YU7 electric vehicle.
<h2>Morgan Stanley: Xiaomi's Q1 Performance Sets New Record, Profitability Significantly Improved</h2>
On the 28th, Xiaomi announced record-breaking performance, mainly benefiting from strong growth across various business segments:
<blockquote>
<ul>
<li>Smartphone Business: Revenue of 50.6 billion RMB, a year-on-year increase of 9%, exceeding Morgan Stanley's expectations by 3%. Although the shipment volume of 41.8 million units only grew by 3% year-on-year, the revenue growth indicates an increase in average selling price.</li>
<li>AIoT Business: Revenue of 32.3 billion RMB, a significant year-on-year increase of 59%, surpassing expectations by 8%. The strong performance in this segment reflects Xiaomi's success in building its smart ecosystem.</li>
<li>Internet Services: Revenue of 9.1 billion RMB, a year-on-year increase of 13%, slightly below expectations by 1%. Notably, revenue from internet services in mainland China reached a record high of 6.4 billion RMB, a year-on-year increase of 14.8%. Advertising revenue grew by 20% year-on-year.</li>
</ul>
</blockquote>
Morgan Stanley stated that Xiaomi has made significant breakthroughs in profitability. The gross margin reached 22.8%, an increase of 0.5 percentage points year-on-year and 2.2 percentage points quarter-on-quarter, achieving the best performance in history. The operating expense ratio was 13.9%, lower than Morgan Stanley's expected 14.5%, reflecting cost synergy effects.
Gross profit of 25.406 billion RMB exceeded Morgan Stanley's expectations by 10%, mainly driven by the dual push of revenue growth and gross margin improvement. Operating profit of 9.964 billion RMB exceeded expectations by 33%, demonstrating Xiaomi's effectiveness in cost control.
Morgan Stanley maintains an &#34;Overweight&#34; rating on Xiaomi, with a target price of HKD 62, representing a 20% upside from the current HKD 51.55.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1c1ba78f-b45e-4ba9-87bb-72ea5e7e11d9.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1c1ba78f-b45e-4ba9-87bb-72ea5e7e11d9.png"/>
Morgan Stanley expects that from 2024 to 2027, Xiaomi's earnings per share (EPS) are expected to continue to grow. By December 2025, Xiaomi's EPS is projected to be 1.45 RMB; by December 2026, the EPS will rise to 1.98 RMB.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/806337a4-2e8a-44db-8d32-67d0a3b13009.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/806337a4-2e8a-44db-8d32-67d0a3b13009.png"/>
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XIACY

01810

On the 28th, Xiaomi announced its Q1 2025 performance, with adjusted net profit reaching RMB 10.676 billion, a year-on-year increase of 64%. Goldman Sachs pointed out that several events will drive Xiaomi's stock price in the next two months, including the Investor Day on June 3, the 618 shopping festival data, and the new product launch conference at the end of June. Morgan Stanley believes that the YU7 electric vehicle, scheduled for launch in July 2025, will be an important catalyst for the stock price increase, expecting its sales to boost Xiaomi's average selling price and gross margin

- Xiaomi reported record Q1 2025 results with adjusted net profit of 10.676 billion RMB, a 64% year-on-year increase.  
- Key upcoming events include the June 3 Investor Day and the launch of the YU7 electric vehicle in July, which is expected to drive stock price growth.  
- The company's strong performance in smartphones and AIoT, alongside improved profitability, positions it well for future growth, with a target price of 62 HKD from Morgan Stanley.

Wallstreetcn

In the next two months, there are many catalysts for Xiaomi's stock price, the most important of which is still YU7!