Zhongtong Finance APP has learned that CMB International released a research report and maintained a buy rating on Xiaomi-W (01810), believing that the recent stock price adjustment provides a good buying opportunity, with a target price of HK$25.39. Yesterday, the bank held an online technology enterprise week investor communication event with Xiaomi Group. Overall, the bank holds a positive view on Xiaomi's continued market share acquisition in the global smartphone market this year, explosive growth of IoT business products, sustained improvement in overseas Internet business and the surge in deliveries of new energy vehicles.
CMB International's main points are as follows:
One of the focus of market discussion: Rising storage product price will lead to a decline in Xiaomi's gross margin level.
Yesterday, multiple media reported that international storage giant Samsung will raise the price of storage products by 15%-20% in the third quarter. The bank believes that Samsung's price adjustment for storage products this time mainly targets server DRAM and enterprise-level NAND Flash products and has little impact on Xiaomi's hardware costs. According to TrendForce's forecast, the price of 3Q24E mobile phone DRAM products will rise by 3-8% on a month-on-month basis, lower than the 5-10% increase in 2Q24. Xiaomi's mobile phone gross margin remained at a high level in 1Q24, mainly due to the digestion of previously low-cost storage product inventory; while the gross margin in 2Q24 is expected to decline on a month-on-month basis, but is expected to gradually recover in 2H24E. Storage prices in the second half of the year will be relatively stable, and Xiaomi will also have flagship new models such as MIX Fold 4 and Xiaomi 15 released, which will have a positive driving effect on cost control and gross margin stability.
One of the focus of market discussion: Xiaomi's SU 7 series of new energy vehicle sales will slow down in the second half of the year.
Management stated that the annual delivery target of the Xiaomi SU 7 series of new energy vehicles of 120,000 units and the June monthly delivery target of 10,000 units remain unchanged, and the main task now is to increase production capacity. Currently, the delivery waiting period for Xiaomi SU 7 series of new energy vehicles is about 30 weeks. The Xiaomi automobile factory has started double-shift production this month to actively increase production capacity. In order to better match customer orders with factory capacity, Xiaomi has shortened the lock-up period for SU 7 car orders from 7 days to 3 days since June 5th.
One of the focus of market discussion: The release of Apple's AI iPhone in the second half of this year will pose a challenge to the company's smartphone competition landscape.
Management expressed confidence in achieving the target of 165 million mobile phone shipments for the year, with the main growth drivers coming from international markets, including Latin America, Africa, the Middle East and Southeast Asia. In terms of AI phone features, based on its strong IoT ecosystem, self-developed surging OS system and voice assistant "Xiao Ai Tong Xue", Xiaomi can bring consumers innovative AI usage experiences. The self-developed "MiLM" large language model of Xiaomi passed the large model filing in May this year and will be combined with end-cloud to empower the "people-car-home full ecology" strategy.