Bank of America Securities: Raises target price for Xiaomi Corporation-W to HKD 69 and reiterates "Buy" rating

According to the Zhitong Finance APP, Bank of America Securities released a research report stating that it has raised the adjusted profit forecast for Xiaomi Corporation-W (01810) for 2025-2027 by 7-16%. The electric vehicle shipment forecasts for 2025/2026/2027 have been raised from 370,000/620,000/800,000 units to 409,000/700,000/950,000 units, reiterating a "Buy" rating, and based on a 22 times price-to-earnings ratio, the target price has been raised from HKD 66 to HKD 69. The firm has lowered the price-to-sales ratio for the electric vehicle business from 5 times to 4 times, noting that the previously high expectations for the YU7 have been largely reflected in the stock price after a 10% increase since June. The report indicates that based on Xiaomi's strategy of "launching one model each year," it believes that Xiaomi is already developing its third electric vehicle model, which will be launched in 2026. Additionally, it noted strong market demand, with the YU7 receiving 240,000 pre-orders within 18 hours of its launch, while the SU7 still has six months of pending orders, and it believes that the third factory under construction can meet the demand. The firm stated that Xiaomi's automotive business gross margin reached 23% in the first quarter of 2025, the highest among its peers. It expects Xiaomi's electric vehicle gross margin to rapidly increase from 25% in 2025 to 26%/27% in 2026/2027. In terms of balance sheets, Chinese automotive manufacturers generally exhibit negative cash cycles with extremely high accounts payable days, while Xiaomi's debt ratio has remained below 10% over the past three years. In early June, several Chinese automotive manufacturers committed to paying parts suppliers within 60 days, and the firm expects Xiaomi to face less pressure due to its lower accounts payable days and strong balance sheet