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PostsMARS Observation | Xiaomi Group's Shift from Growth to Value
Stocks like Tencent and Kweichow Moutai have long been regarded by investors as the best targets for value investing, following the classic value investing framework established by Buffett and Munger, with performance growth matching market capitalization as the long-term investment rationale.
In 2024, Xiaomi Group is undoubtedly the brightest star in the Hang Seng Tech Index. After the sustained strong sales of the SU7 in June, its stock price began to rise continuously. Not only Xiaomi, but also its ecosystem company Kingsoft Cloud saw its stock price quadruple in a short period. From a growth perspective, compared to traditional internet companies, Xiaomi, with its core strategy of "Human-Car-Home Full Ecosystem," is more favored by global capital.
From 2025 to date, despite a brief decline in April, Xiaomi's stock price hit a new high of HKD 61.45 on June 27 after the release of the YU7. The overwhelming orders for the YU7 firmly established Xiaomi's market capitalization in the HKD 1.5 trillion range. Xiaomi continues to redefine people's perception of automakers with its volume and orders, proving how important the "blockbuster" methodology is for product development.
Today, there are still many "internet trolls" online who launch indiscriminate personal attacks without factual basis. However, given the current progress of internet cleanup, these organizations operating between certain manufacturers have been placed under close scrutiny. Over time, their ability to profit from such activities will be significantly reduced, cutting off their business model at its root.
Nevertheless, we must recognize the reality that Xiaomi Group's current price is no longer that of a HKD 300 billion undervalued growth stock perpetually below its IPO price. It has transformed into a value stock where retail and institutional investors have reached a consensus, willing to price in some future performance expectations. Buying at today's price while still expecting high growth similar to 2024 would be somewhat unrealistic.
The transition from growth to value is an inevitable step for Xiaomi as it moves toward the "Trillion Dollar Club." It is a significant milestone where diverging opinions gradually converge into consensus. Only when more institutions are willing to price in Xiaomi's future expectations in advance will retail investors see further upward momentum for "1810."
The two most critical products for Xiaomi's future strategy are the already-released Xiaomi AI Glasses and the long-awaited Xiaomi Smart Robot. Despite the rising hype around embodied AI, Xiaomi has remained remarkably restrained in this area.
Just like the "GPU rush" during the 2023 AI boom, Xiaomi is now taking its time, conducting thorough user research, clearly defining product use cases, and applying its signature methodology to create "blockbusters." This is the Xiaomi-style approach to entering new markets.
No one can fully predict market trends, which is precisely why the secondary market remains a "dangerous yet fascinating" game. Only with sufficient respect for risk and room for expectations can we navigate cycles and truly become "friends of time."
July 23, Mars at Qinghe.
$XIAOMI-W(01810.HK)
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