Zhenzhuo Institution Perspective: Xiaomi Group (01810.HK): Gross margin of innovative business further increased quarter-on-quarter

$XIAOMI-W(01810.HK) released its second quarter and first-half results for the period ending June 30, 2025, showing continued strong performance. In the second quarter of 2025, the company achieved revenue of approximately RMB 116 billion, a year-on-year increase of 30.5%, reaching a record high. Adjusted net profit was approximately RMB 10.8 billion, a significant increase of 75.4% year-on-year, exceeding market expectations of RMB 10.2 billion.

By business segment, the "Smartphone × AIoT" segment revenue was approximately RMB 94.7 billion, a year-on-year increase of 14.8%. Smartphone revenue was approximately RMB 45.5 billion, with shipments increasing slightly by 0.6%, and a gross margin of 11.5%, affected by price competition in international markets. Revenue from IoT and lifestyle consumer products grew 44.7% to RMB 38.7 billion, benefiting from significant increases in shipments of smart home appliances, wearables, and tablets. Another key area of market focus, innovative businesses such as smart electric vehicles and AI, generated revenue of RMB 21.3 billion, with quarterly vehicle deliveries exceeding 81,000 units. The gross margin further improved to 26.4%, up 3.2 percentage points from the previous quarter, and the segment's operating loss narrowed to RMB 300 million. Management aims for the automotive business to achieve profitability in a single quarter in the second half of the year.

Looking ahead, management will continue to adhere to the "steady and proactive" business strategy, steadily advance the "Human x Car x Home" ecosystem strategy, deepen its presence in AI and smart vehicle sectors, and continuously optimize product portfolios while enhancing user ecosystem engagement.

Source: KGI Securities