24Q1 performance: Profit doubled, and the gross margin of the three major businesses continued the upward trend. Overall performance: Xiaomi achieved operating income of 75.5 billion yuan, a year-on-year increase of 27%, and achieved adjusted net profit of 6.49 billion yuan, a year-on-year increase of 100.75%, a record high since the company went public. The adjusted net interest rate reached 8.6%. After adding automotive and innovation business expenses, the core adjusted profit reached 8.79 billion yuan, and the core business adjusted net interest rate was 11.64%.
Gross profit margin: The company's gross profit for the quarter was 22.29%, up 2.8 pct year on year and 0.97 pct month on month.
1) The gross margin of the mobile phone business was affected by the increase in core component prices. The gross margin of the mobile phone business was 1.6 pct, but overall it was still at its high level, reaching 14.8%, up 3.6 pcts year on year; 2) The gross margin of the AIoT business reached 19.9%, up 4.1 pct year on year and 5.9 pct month on month. We judge that the profit margin increase was mainly due to the increase in the company's AIoT self-development ratio; 3) The gross margin of the Internet business reached 74.2%, up 2 pcts year on year and 1.5 pct month on month.
Mobile phone shipments increased dramatically, and overseas markets maintained rapid expansion. The mobile phone business revenue reached 46.48 billion yuan this quarter, an increase of 33% over the previous year. Global shipments of Xiaomi phones reached 40.6 million units, a year-on-year increase of 33.7%. 1) Overseas markets: Among them, overseas markets recorded significant growth rates. Shipments from Africa, the Middle East, Southeast Asia and Latin America all recorded significant increases, with a year-on-year increase of +115%/96%/56%/45%, with market shares of 10.6% /20.9% /16.5%/15.3% respectively, up 4.5 pct/7.1 pct/4.4pct/2.0pct year-on-year. 2) Domestic market: The high-end market has progressed significantly. In this quarter, Xiaomi's mobile phone market share of 3,000 yuan or more was 21.7% in mainland China (17%/17.7%/20.3% in 2021-2023, respectively), and the market share of 5000-6000 yuan models was 10.1%, an increase of 5.7 pcts over the previous year.
The AIoT and Internet business grew significantly. The number of users expanded further. In this quarter, AIoT business revenue was 20.374 billion yuan, up 21% year on year. The total number of devices connected to the AIoT platform reached 786 million, an increase of 27% year on year. Among them, the number of users with five or more devices connected to the AIoT platform was 15.2 million, an increase of 24.2% year on year.
Internet business revenue was 8,048 billion yuan, up 14.5% year on year. Among them, overseas business revenue increased significantly, reaching 2.5 billion yuan, up 39% year on year, accounting for 31.2% of total Internet revenue, up 5.5 pct year on year. By the end of the first quarter, the number of monthly active users worldwide was 658 million, up 10.6% year over year.
Since June, the automobile business has expanded to ensure the delivery of 100,000 vehicles throughout the year. As of May 15, 2024, Xiaomi cars have delivered 10,000 new cars. The company expects to start double shift production in June this year to expand production capacity, so that the Xiaomi car series can deliver more than 10,000 new cars in a single month, and ensure the delivery of 100,000 Xiaomi cars throughout the year. It is recommended to pay attention to the subsequent order volume and production capacity of Xiaomi cars.
Investment advice
We expect the company's revenue in 2024/2025/2026 to be 3323/3805/422.8 billion yuan, achieving +22.6%/+14.5%/+11.1% year over year; adjusted net profit of 172.60 /195.93/20.882 billion yuan, achieving -10.4%/+13.5%/+6.6% YoY, maintaining a “buy” rating.
Risk warning
Raw material costs for the hardware business have risen; production capacity in the automotive business has fallen short of expectations.