In "The Big Banks," China International Capital Corporation estimates that Xiaomi's adjusted net profit for the last quarter will be between 5.5 billion and 6 billion RMB

Bank of China International released a report, predicting that Xiaomi (01810.HK) will see a significant slowdown in revenue growth to 8% year-on-year in the fourth quarter of 2025, but a quarter-on-quarter increase of 4% to RMB 117.6 billion. This is influenced by weak smartphone shipments and a noticeable downturn in the Internet of Things (IoT) business, partially offset by the resilience of electric vehicle sales. The overall gross margin is expected to shrink by 2 percentage points from 22.9% in the third quarter, primarily due to rising memory prices, IoT promotions, and a deteriorating electric vehicle product mix, although the profit margin in the internet services segment remains stable. Coupled with an increase in operating expenses and a decrease in investment income at the end of the year, Xiaomi's adjusted net profit for the fourth quarter of 2025 is expected to be between RMB 5.5 billion and RMB 6 billion.

Looking ahead to 2026, the surge in memory prices will further exacerbate pressures in the global mass-market smartphone industry, affecting Xiaomi's shipment outlook. To address these challenges, the bank expects Xiaomi to accelerate its high-end strategy domestically while deepening its layout in strategic overseas markets through regional customization. For the smart electric vehicle business, due to a decline in sales in the first quarter caused by model upgrades and overall industry weakness, it is believed that the upcoming new car releases and their market response will be key catalysts for Xiaomi to regain growth momentum.

The bank has lowered its revenue forecasts for Xiaomi for 2026-2027 by 2% and 1%, to RMB 510 billion and RMB 597 billion, respectively, and adjusted net profit forecasts down by 8% and 7% to RMB 35 billion and RMB 48 billion, reflecting a bleaker smartphone shipment outlook, rising BOM costs, and compressed electric vehicle profit margins. Although Xiaomi faces comprehensive pressure on profitability in the short term, it believes that its aggressive investments in artificial intelligence, robotics, and chips are expected to yield early returns this year, supporting stock price valuation. The "Buy" rating is maintained, with a target price of RMB 47.88