24Q1's revenue reached 75.5 billion yuan, up 27% year on year; adjusted net profit reached 6.5 billion yuan (including innovative business expenses such as smart electric vehicles, RMB 2.3 billion), up 100.8% year on year, a record high; gross margin exceeded 22%, up 2.8 pct year on year.
Smartphone shipments have increased year-on-year, and the high-end strategy has achieved remarkable results. The company's 24Q1 smartphone achieved revenue of 46.5 billion yuan, up 33% year on year; gross margin was about 15%, up 3.6 pct year on year. The high-end strategy has achieved remarkable results. 24Q1's global smartphone shipments also increased by 34% to 40.6 million units, with high-end models accounting for 22%; mainland China's market share of 5,000 to 6,000 yuan was over 10%, an increase of 5.8 pct over the previous year. The company released the Xiaomi 14 Ultra in February '24, equipped with Xiaomi's first AI large-scale model computational photography platform, with 60 TOPS computing power.
IoT and consumer products continued to grow, and shipments of multiple products increased year-on-year. In 24Q1, IoT and consumer products business revenue was 20.4 billion yuan, up 21% year on year; gross margin was about 20%, up 4.1 pct year on year. In 24Q1, the company's tablet revenue also increased 71%, and the revenue of major smart appliances also increased 46%. As of March 31, the number of IoT devices (excluding smartphones, tablets and laptops) connected to the company's AIoT platform reached about 790 million, an increase of 27% over the previous year.
Internet services increased revenue and profits, and monthly active users continued to grow. Internet business revenue reached 8 billion yuan in 24Q1, a record high, up about 15% year on year; gross margin reached 74%, up 1.9 pct year on year; achieved advertising revenue of 5.5 billion yuan, up 25% year on year; and game business revenue of 1.2 billion yuan. In March '24, the number of monthly active users worldwide reached 660 million, an increase of 11% over the previous year; the number of monthly active smart TV users reached 68 million, an increase of 12% over the previous year.
The smart electric vehicle SU7 is in high demand, and the “whole ecosystem of people and cars” strategy continues to advance. Orders for the company's first smart electric vehicle, the Xiaomi SU7, are in high demand. As of May 15, a total of 10,000 new SU7 series vehicles have been delivered. The Xiaomi SU7 has built-in Surge OS to connect vehicles, mobile phones, and Mijia smart devices, and is equipped with an AI assistant 'Little Ai Class' to further enhance the user experience. The Xiaomi Pilot Max plans to launch City Pilot in 10 cities in mainland China by the end of May, and fully launch City Pilot in mainland China in August.
We forecast the company's earnings per share for 24-26 to be 0.60/0.73/0.85 (the original 24-25 forecast was 0.63/0.70 yuan, which mainly increased revenue, gross margin and expense ratio forecasts). According to a comparable company's 24-year PE valuation of 33 times, the corresponding target price is HK$21.44 (using the RMB to HKD exchange rate of 1:1.08), maintaining the purchase rating.
Risk warning
Mobile phone sales fall short of expectations, IOT business is slowing down, automobile business falls short of expectations, and fair value investment profit and loss risks fluctuation.