In "The Big Banks," Citigroup lowers Xiaomi's target price to 60 yuan, with uncertainty remaining due to slowing smartphone and AIoT revenue

Citi published a research report indicating that Xiaomi (01810.HK) achieved third-quarter results this year that met expectations, with total revenue and adjusted net profit growing by 22.3% and 80.8% year-on-year, reaching RMB 113 billion and RMB 11.3 billion, respectively. Smartphone revenue declined by 3% due to weak shipments in China and India, while revenue from Artificial Intelligence of Things (AIoT) slowed to a growth of 5.6% due to reduced national subsidies. However, electric vehicle revenue reached RMB 29 billion, accounting for 26% of the group's revenue, driven by increased delivery volumes and average selling prices.

Citi forecasts that Xiaomi's total revenue and adjusted net profit for the fourth quarter will grow by 14% and 17% year-on-year, respectively. Considering the uncertainties in smartphones and AIoT, the adjusted net profit forecasts for Xiaomi for the fiscal years 2025 and 2026 have been revised to growth of 4% and a decline of 6%, respectively; the target price has been lowered from HKD 69 to HKD 60, while still believing that the electric vehicle business has attractive upside potential, reiterating a "Buy" rating