Key points of investment
Event: Xiaomi Group announced its results for the first quarter of 2024. 2024Q1 achieved revenue of 75.5 billion yuan, +27% year over year, and adjusted net profit of 6.5 billion yuan, a record high of +101% over the same period last year. The company's performance exceeded the market's unanimous expectations.
Mobile phone business: Revenue and gross profit growth are expected to catalyze a steady increase in the smartphone business Q1 revenue of 46.5 billion yuan, +33% year-on-year, and gross margin of 14.8%, up 3.6 percentage points year-on-year, mainly benefiting from improvements in product structure and reduction in core component costs. With 2024Q1, the company's mobile phone shipments reached 40.6 million units, +34% year over year, significantly exceeding the global average growth rate of 9.8%. The market share was 13.8%, ranking among the top three in the world for 15 consecutive quarters.
The company adheres to a high-end strategy, and ASP in mainland China and overseas increased year on year, respectively.
The company continues to promote high-end strategies and new retail strategies, and is deeply involved in the global layout. We believe that the company can maintain steady performance in the mobile phone business by expanding its share+boosting ASP.
The IoT and Internet businesses both reached new highs. The closed-loop ecological business continued to grow. The IoT and consumer products business had Q1 revenue of 20.4 billion yuan, +21% over the same period, and gross margin reached 19.9%, a record high, up 4.1 percentage points over the previous year. Key categories continued the healthy growth trend, with Q1 TWS shipments rising to second place in the world and number one in mainland China; shipments of wearable products in mainland China +70% YoY; global shipments of tablet products +93% YoY; and revenue of major smart appliances +46% YoY. We believe that the company's intelligent ecosystem is improving, global channels are constantly being optimized, and the IoT business is expected to grow in key categories.
Internet business revenue in Q1 was 8 billion yuan, a record high, +15% year over year, and gross margin reached 74.2%, up 1.9 percentage points year over year. Of this, advertising revenue is 5.5 billion yuan, and game revenue is 1.2 billion yuan. The number of users in the company's Internet business continues to expand, and the number of monthly active users has reached a record high. It is closed in a healthy ecological loop with the mobile phone and IoT business, and is expected to maintain the growth trend.
SU7 takes the lead, and the company actively lays out its ambitions
As of April 30, the SU7 had locked a total of 88,063 units; in the context of orders not being the main limitation, the company aims to ensure delivery of 100,000 vehicles this year, aiming to deliver 120,000 vehicles. For this reason, the company will start a double factory shift system and deliver at least 10,000 vehicles in the same month; at the same time, the company will further expand its sales network. It is planned to cover 46 cities with 219 stores and cover 86 cities with 143 service centers by the end of the year, hoping that the supply and demand of the automobile business will be fully developed.
Profit forecast and investment rating: We believe that the company group has a clear strategy, stabilizes the mobile phone business, adjusts the structure, expands the demand for IoT Internet, and opens up new performance space for automobiles. We raised the company's net profit forecast for 2024-2026 from 159/189/212 to 161/197/22.6 billion yuan. The latest closing price corresponds to PE of 28.3/23.2/20.0 times, maintaining a “buy” rating.
Risk warning: industry competition increases risk, technology upgrade risk, automobile demand falls short of expectations