招银国际 ·  May 24

Xiaomi's 1Q24 revenue/net profit growth of 27%/101% YoY beat our/consensus estimates, mainly driven by a stronger GPM, improving revenue mix and better finance incomes. Looking ahead, Xiaomi reiterated its positive view on smartphone global share gains, new retail strategy execution and EV shipment deliveries, and mgmt. guided to target 120k annual EV deliveries (vs 100k prior guidance). We believe Xiaomi's share gain momentum, AIoT sales strength and overseas internet revenue will continue to drive earnings growth into FY24E- 25E. We raise FY24-26E EPS by 12-16% to factor in the strong 1Q results, and lift SOTP-based TP to HK$25.39. Upcoming catalysts include SU7 shipment progress and smartphone market share gains.

1Q24 beat on better margins. Xiaomi's 1Q24 global smartphone shipments increased 33.7% YoY and ASP dropped 0.6% YoY due to an increasing share of lower-ASP smartphone shipments overseas. By segment, smartphone/AIoT/internet revenue rose 32.9%/21.0%/14.5% YoY, boosted by strong SP/Pad/TWS/large home appliance shipments, a large global user base and better monetization in overseas internet segment. Despite market concerns on rising BOM cost pressure, 1Q24 blended GPM came in at 22.3%, better than our/consensus estimates, mainly due to resilient smartphone margin and record-high AIoT GPM of 19.9% with a better product mix.

2024E outlook: 120k SU7 annual delivery target, new retail strategy to accelerate for AIoT expansion. Xiaomi guided to target 120k annual EV deliveries (vs. prior 100k units) and 10k monthly deliveries in June. Xiaomi's EV sales network targeted to expend to 219 stores in 46 cities by year-end, together with Xiaomi's new retail strategy targeting at opening another 10k new stores in China in FY24-26. Overseas retail channels expansion plan is also set to boost AIoT sales. Overall, we expect Xiaomi's revenue/adj. net profit to grow 24%/19% YoY in FY24E.

Our FY24-26E EPS are 28-39% above consensus; Maintain BUY. We raise FY24-26E EPS by 12%-16% to factor in the strong 1Q24 results, and lift SOTP-based TP to HK$25.39, implying 25x FY24E P/E. Reiterate BUY. Catalysts include EV product shipment progress and smartphone market share gains.

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