The Zhitong Finance App learned that Anxin International released a research report stating that it maintains the Xiaomi Group-W (01810) “buy” rating, with a target price of HK$24. In 2024Q1, the company advanced its high-end smartphone strategy. Overall shipment performance was superior to that of its peers, and the Internet and IOT business also performed well. Furthermore, the innovative product SU7 was widely recognized by consumers after its launch and successfully opened up the situation, but it is estimated that the next two years will be difficult to bring about net profit gains.

Anxin International's main views are as follows:

Excellent performance in the Q1 smartphone business

According to Canalys data, 24Q1 Xiaomi ranked third in the global smartphone market, with a market share of 13.8%, and smartphone shipments of 40.6 million units, up 33.7% year on year, exceeding the 9.8% year-on-year increase in global smartphone shipments. High-end smartphone shipments accounted for 21.7% of total smartphone shipments, an increase of 1.4 percentage points over the previous year. Revenue from the 24Q1 smartphone business was RMB 46.5 billion, up 32.9% year over year. Overall ASP decreased slightly by 0.6% from 1,151 yuan in 2023Q1 to 1,144 yuan in 2024Q1, and the gross margin of the smartphone segment increased from 11.2% in 2023Q1 to 14.8% in 2024Q1, mainly due to improved product structure and lower core component costs.

The performance quality and efficiency of the Internet and IOT have both increased

Internet service revenue reached RMB 8 billion in 2024Q1, a record high, up 14.5% year on year, and gross margin reached 74.2%, up 1.9 percentage points year on year. Thanks to the number of monthly active users of the Xiaomi Group reached 660 million in March 2024, an increase of 10.6% year on year. Revenue from the IoT and consumer products business was RMB 20.4 billion, up 21.0% year on year. The gross margin of the business segment reached a record high of 19.9%, a significant increase of 4.1 percentage points over the previous year.

The automotive business started well

In March 2024, the Xiaomi Group officially released the first smart electric vehicle, the Xiaomi SU7 series. As of May 15, 2024, the total number of new Xiaomi cars delivered was 10,000. The company's goal is to deliver more than 10,000 new cars in the Xiaomi car series in a single month in June 2024. Since its launch, the XiaoMiSU7 series has received widespread attention from the market and has garnered strong order demand. Excellent product strength and strong marketing power have made the bank believe that Xiaomi has been recognized by consumer brands. The future focus should be on Xiaomi's production capacity expansion plans.