---
title: "SU 7 is OK! Lei Jun \"convinces\" Wall Street"
type: "News"
locale: "zh-CN"
url: "https://longbridge.com/zh-CN/news/202662934.md"
description: "Citigroup raised Xiaomi's target price from HKD 19.6 to HKD 21.9, maintaining a \"buy\" rating, and increased the adjusted EPS for 2024 by 25%. JP Morgan also continued to maintain an \"overweight\" rating for Xiaomi and set a target price at the level of HKD 21.0"
datetime: "2024-04-24T04:53:28.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/202662934.md)
  - [en](https://longbridge.com/en/news/202662934.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/202662934.md)
---

> 支持的语言: [English](https://longbridge.com/en/news/202662934.md) | [繁體中文](https://longbridge.com/zh-HK/news/202662934.md)


# SU 7 is OK! Lei Jun "convinces" Wall Street

On April 23, Lei Jun shared the latest progress of Xiaomi's SU7 at the Xiaomi Investor Conference: **"The locked order volume has exceeded 70,000 units, with a delivery target of 100,000 units this year."**

Lei Jun stated that Xiaomi will invest 11 billion to 12 billion in new businesses, including automobiles, and will focus 100% on the domestic market in the next three years, with the **goal of becoming one of the top five global car manufacturers in the next fifteen to twenty years.**

After the Investor Day, major Wall Street banks Citigroup and JP Morgan immediately released reports expressing optimism about Xiaomi.

**Citigroup raised Xiaomi's target price from HKD 19.6 to HKD 21.9 and maintained a "buy" rating. JP Morgan also continued to maintain an "overweight" rating on Xiaomi and set a target price at the level of HKD 21.0.**

As of the time of writing, Xiaomi's Hong Kong stock price was HKD 16.52, with a growth of over 11% in the past month.

![Image](https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c734621a-3253-4872-ac4f-2754cd59d2bb.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

## JP Morgan and Citigroup Bullish on Xiaomi's Automobile Business

As Lei Jun summarized, Xiaomi has already entered the field of automobiles, but it is too early to talk about success now. It still needs to go through the hurdles of quality, delivery, and service to truly succeed.

Regarding the electric vehicle business, Xiaomi's Investor Day conveyed several positive messages: **Sales exceeded expectations, and the gross profit margin is expected to turn positive in 2024, with a potential gross profit margin of 5-10% in 2025, while operating expenses are also under control.**

-   Xiaomi's electric vehicles have already locked in orders for 70,000 units, with an estimated shipment volume of 100,000 units in 2024, far exceeding the initial estimates.
-   The demand leans towards the high-end market, with SU7 Max accounting for over 40% of orders, and the average order price exceeding expectations. The current focus is on increasing production capacity, with the goal of reaching a monthly output of 10,000 units by June.
-   Xiaomi plans to increase investment in new businesses, including automobiles, by 11 billion to 12 billion, while further increasing investment in key areas such as the underlying operating system.
-   Lei Jun stated that Xiaomi's automobile business will focus 100% on the domestic market in the next three years, with making the Chinese market successful as the first step.
-   Xiaomi's goal is not low-level profitability, but to become one of the top five global car manufacturers in the next fifteen to twenty years, becoming a new generation of global hardcore technology leaders.
-   Xiaomi expects the gross profit margin of the electric vehicle business to turn positive in 2024 and achieve a gross profit margin of 5-10% in 2025. **JP Morgan believes that the gross profit margin expectations for next year are entirely achievable.** Xiaomi's automobile business can break even when annual sales reach 300,000 to 400,000 units
-   According to Lei Jun's statement at the Investor Day, JP Morgan predicts that Xiaomi will launch an SUV model in 2025, which may drive further growth in car sales.

**Citi has raised its forecasts for Xiaomi's electric vehicle shipments from 2024 to 2026 to 100,000 units, 200,000 units, and 280,000 units respectively** (previously 60,000 units, 131,000 units, and 252,000 units), and has increased the gross margin forecasts to 6%, 9%, and 12% (previously -10%, -2%, and 11%).

Based on the better-than-expected guidance for the electric vehicle business, **Citi has raised Xiaomi's adjusted earnings per share (EPS) forecasts for 2024 to 2026 by 25%, 37%, and 32%, to 0.64 yuan, 0.59 yuan, and 0.79 yuan, respectively**.

However, JP Morgan believes that the electric vehicle business may drag down Xiaomi's profitability before achieving scale, and has lowered the adjusted EPS forecast for 2024 by 3% to 0.71 yuan, while raising the forecast for 2025 by 26% to 0.85 yuan.

![Image](https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/88461f1e-17bc-405b-9e82-d58ad98e2a26.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

## Smartphone gross margin slightly declines, core hardware business re-enters growth trajectory

Key information from the Investor Day includes:

-   This year, smartphone shipments increased by 15 to 20 million units, with R&D expenses of 24 billion RMB; due to raw material cost pressures, the gross margin may decrease slightly, but the extent is manageable.
-   Xiaomi aims to become the global leader in smartphone shipments by 2028; top three in tablet shipments by 2025; a 50% year-on-year growth in smartphone shipments priced over $600 in 2024; over 6 million air conditioner sales in 2024; doubling the number of high-end internet users in the next three years.
-   Xiaomi is currently focusing on three businesses: automobiles, Surge OS, and AI.
-   By 2025, the engineering team for smart driving will increase from the current 1,000+ to 2,000+.

JP Morgan states that **Xiaomi's core hardware business has finally re-entered a growth trajectory**, and with the help of the following factors, it should continue its growth momentum in 2024:

-   Strengthening its position in the high-end market in China, driving a strong increase in average selling prices;
-   Loss of market share in India has mostly ended, and growth is expected to resume in EMEA (Europe, Middle East, and Africa) and Latin America
-   The AIoT (Artificial Intelligence + Internet of Things) business turned losses into profits, enriched its product line, increased market share of new products (such as air conditioners), and saw growth in overseas market operations

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