In "Major Banks," China International Capital Corporation: Maintains "Buy" rating on Xiaomi Corporation, expects the third model to become a hot product next year

CITIC International published a research report indicating that the stock price of Xiaomi Corporation (01810.HK) has shown volatility this week, mainly influenced by several news hotspots and market rumors, including incidents such as the fatal car accident involving the Chengdu SU7 Ultra, road testing of the third model in Xinjiang, and the readiness of the second-phase factory in Beijing. CITIC International maintains a "Buy" rating for the stock.

The report noted that a serious traffic accident occurred on Monday (13th) on Tianfu Avenue in Chengdu, Sichuan, which was officially determined by traffic police to be caused by the driver's drunk driving and speeding, with no direct relation to the inherent design of the vehicle. So far, Xiaomi has not made an official response to the incident, indicating that the accident was primarily due to driver negligence and unrelated to any inherent design, manufacturing, or systemic defects of Xiaomi vehicles.

CITIC International also pointed out that although the second-phase factory in Beijing has not yet obtained formal production approval, the company has observed a stable growth in monthly production. In light of recent technological adjustments and upgrades providing further capacity expansion, the firm estimates that Xiaomi's monthly production has an additional 20% upside potential in the short term, which could drive monthly deliveries close to 50,000 vehicles in the fourth quarter of this year, making the firm's annual sales target of 400,000 vehicles easily achievable or even surpassable.

The report stated that it understands that Xiaomi's third model is a large six-seat SUV, over 5 meters in length, and it is expected to be priced between 200,000 to 300,000 RMB, making it more suitable for family travel needs; it is believed to become another hot product next year.

CITIC International stated that it maintains its forecast for Xiaomi's vehicle sales at 400,000 and 700,000 units for this year and next year, respectively. If the subsequent technological upgrades at the Beijing factory further enhance production capacity, it is expected that the delivery volume will have further upside potential compared to the current forecast.

In addition, CITIC International predicts that although the Xiaomi 17 series high-end lineup outperforms the Xiaomi 15, it still expects Xiaomi's smartphone gross profit margin (GPM) to bottom out in the second half of this year. In the third quarter of this year, it estimates that Xiaomi's smartphone GPM will be 11%, down 0.5 percentage points from 11.5% in the second quarter of this year