Daiwa: Xiaomi Corporation-W aims for a revenue target of 700 billion RMB in the next three years, with annual electric vehicle deliveries of 1 million units

According to the Zhitong Finance APP, Daiwa released a research report stating that on the 24th, they held a non-deal roadshow with the management of Xiaomi Corporation-W (01810). The firm cited that the technological upgrades at Xiaomi's first-phase electric vehicle factory have increased capacity, boosting weekly shipments from 7,000 to 8,000 vehicles in early August to 10,000 to 12,000 vehicles since late August. The design capacity of the second-phase factory is similar to that of the first phase and is currently awaiting final government approval. Daiwa reiterated Xiaomi's "Buy" rating and a 12-month target price of HKD 76, based on a price-to-earnings ratio of 36 times for 2025 to 2026. Xiaomi's management believes that the company’s electric vehicles do not face overcapacity or internal competition pressure. In 2026, the company will launch new models and plans to introduce variants such as the SU7 or YU7. Xiaomi expects to start exporting electric vehicles to the European market in 2027 and is researching localized production in Europe. The company's current priority is to capture market share, with no plans to enter the RMB 150,000 price range in the next 5 to 10 years, instead focusing on the mid-to-high-end market. The target for electric vehicle deliveries in 2025 remains unchanged at 350,000 units, and overall business progress is good, not significantly affected by changes in subsidy policies. In terms of the smartphone business, due to rising memory costs, the company expects a gross margin of 11% to 12% for smartphones in the second half of 2025, with pressure expected to ease in the first half of 2026. Xiaomi is researching upgrades to smartphone specifications (such as switching to DDR5) and considering passing costs onto consumers. The company predicts that smartphone subsidies will gradually exit in the second half of the year, but the impact will be limited, as 70% of smartphones are sold overseas, and IoT business volume and average price growth are better than peers. Xiaomi plans to utilize AI models to enhance the functionality of various products and reduce operating costs (for example, AI is responsible for 30% to 40% of code writing), promoting the commercialization of AI. Daiwa quoted Xiaomi's management stating that the company's revenue target is to reach RMB 700 billion within three years, with plans to achieve the following goals in the next three years: 1) Increase annual smartphone shipments by 10 million units to 200 million units, driving smartphone business revenue to RMB 250 billion; 2) Double IoT revenue to RMB 200 billion; 3) Achieve annual electric vehicle deliveries of 1 million units in the next three years, contributing RMB 250 billion in revenue