Daiwa: Raises Xiaomi Corporation-W target price to HKD 76, second-quarter revenue and adjusted net profit roughly in line with expectations

Daiwa released a research report stating that Xiaomi Corporation-W's revenue and adjusted earnings for the second quarter were roughly in line with market expectations. Driven by higher average selling prices of products like the SU7 Ultra and economies of scale, Xiaomi's gross margin for electric vehicles reached 26.4% in the second quarter. The firm expects the gross margin for electric vehicles to further increase to 28% in the third quarter. This could potentially allow Xiaomi's automotive business to achieve breakeven on a quarterly or monthly basis in the second half of the year. Based on the upward revision of the electric vehicle gross margin forecast, the earnings per share estimate for Xiaomi for 2025 to 2027 has been raised by 2% to 9%. The "Buy" rating is reaffirmed, and the target price has been raised from HKD 72 to HKD 76. In terms of smartphones, due to the limited number of products released, the firm has become more cautious about Xiaomi's shipment volume in the third quarter, expecting shipments of 42.2 million units for the third quarter and a total annual shipment of 172 million units, compared to Xiaomi's annual target of 170 million to 175 million units