CMB International: Maintains "Buy" rating on Xiaomi Corporation-W, raises target price to HKD 62

According to the Zhitong Finance APP, Jiangyin International has released a research report stating that it has raised the revenue forecast for Xiaomi Corporation-W (01810) for 2025/26 to RMB 503.0 billion / 615.9 billion, and adjusted the 2025/26 adjusted EPS to RMB 1.87 / 2.14 (previously RMB 1.51 / 1.98). The bank has lowered the ASP for Xiaomi's automotive business in 2026 to RMB 254,000 (previously RMB 270,000). Based on a 26 times price-to-earnings ratio for mobile phones and xAIoT in 2026 and a 2 times price-to-sales ratio for the automotive business, combined with exchange rate factors, the target price has been raised to HKD 62, maintaining a buy rating. Key Points from Jiangyin International: 1Q25 performance exceeded expectations, AIoT continues to grow rapidly, automotive gross margin improves Xiaomi's 1Q25 revenue/adjusted net profit was RMB 111.3 billion / 10.7 billion, exceeding market and the bank's expectations (RMB 107.0 billion / 8.2 billion). Benefiting from strong growth in categories such as large home appliances, wearables, and tablets, AIoT revenue increased by 59% year-on-year to RMB 32.3 billion; gross margin rose from 20.5% in 4Q24 to 25.2%. The automotive gross margin continued to improve to 23.2%, mainly due to the scale effects brought by the SU7, the company's high management efficiency and channel efficiency, product mix, and growth in equity income. Focus on the sales and capacity ramp-up of YU7 after its launch The successful SU7 product has led to continuous cost optimization and scale effects, with 1Q25 deliveries of 75,900 units and an ASP of RMB 238,000. The automotive business loss narrowed by RMB 200 million quarter-on-quarter to a loss of RMB 500 million. The bank suggests paying attention to the order performance of YU7 after its launch in July and the ramp-up of the second-phase factory capacity. According to third-party data, Xiaomi regained the top spot in China's smartphone shipments in 1Q25, with its high-end market share increasing to 25%. The bank predicts that global smartphone market growth will be less than 1% in 2025, and believes that Xiaomi's market share in China and emerging markets may continue to rise, suggesting attention to changes in ASP during its high-end process. Management stated that it will continue to increase investment in AI, expecting AI to account for one-quarter of total R&D investment this year, with a planned annual R&D investment of RMB 30 billion. Optimistic about the company's long-term expansion in the large home appliance business and becoming a strong driver of AIoT business In 1Q25, the sales volume and ASP of air conditioners, refrigerators, and washing machines continued to rise, with revenue maintaining a high year-on-year growth of 114%; tablet revenue also achieved a 40% quarter-on-quarter growth in 1Q25. The bank believes that Xiaomi's continued expansion of offline stores, overseas home appliance sales, and strong product capabilities are expected to drive sustained growth in large home appliance sales and ASP, while the construction of the Wuhan smart factory is also expected to further optimize costs and improve gross margins; large home appliances are expected to become a long-term driver of AIoT. The bank is optimistic about Xiaomi's execution in AIoT in the long term but advises investors to pay attention to short-term competition from traditional home appliance manufacturers and market demand for large home appliance products in the second half of the year